I can get you a 256MB OpenVZ with 100GB Bandwidth and 50GB of disk space for $2.99/month!
Use the code BLASTOFF to bring it down to $2.69 recurring, or the one in my signature for 30% off your first month.
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From my experience, OpenVZ has always been more than enough. Sure, the extra capabilities of Xen or KVM are interesting, but they're really just extra overhead. For tinkering, I like KVM. For production use, I think OpenVZ is the way to go.
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Install Debian, because I always get CentOS no matter what I pick on the order form
apt-get update
apt-get upgrade
passwd root #use something like correcthorsebatterystaple
apt-get install sudo vim less screen apache2 php5 libapache2-mod-php5 php5-curl
uname -a
less...