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My website is having nearly 50 GB of images and growing gradually. I want to move these images to either S3 or another image hosting server.

As an alternative solution, I want to keep these at another domain and want to serve images from there.

In terms of performance and monthly server charges, which one will be good - S3 or dedicated image server?

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I would recommend going with a cloud storage solution instead a dedicated server, because of the reduced maintenance requirements, ability to scale on demand, and lower costs.

I am using Microsoft's Azure cloud for a solution I'm currently building, but Amazon's S3 is an almost identical alternative as a storage service. With small variations, Microsoft's and Amazon's prices are in the range of USD 0.10 - 0.15 per month per GB stored. In case you decide to consider these, you can check the Azure and S3 sites for specific pricing details.

Regarding performance, as I mentioned, my experience is with Mircosoft's Azure cloud and I haven't had any issues with downtimes or bandwidth bottlenecks. I'm pretty sure Amazon's offering is solid, too.

Hope this helps.