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What is better for small vps? What will be the problems, if go with old version? That would be a LAMP server.

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up vote 2 down vote accepted

Old version Ubuntu 8.04 LTS will give you much older packages e.g. Apache 2.2.8, PHP 5.2.4, MySQL 5.0.51. A newer version will have more recent / newer packages (doh!).
Ubuntu 10.04 LTS instead of 8.04 will also be a reasonable choice, for it has long term support, so longer than 10.10 or 11.04 (up until 2015 - see image courtesy of Wikipedia -->

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