Can I run Drupal on 256MB VPS hosting ?
I know it depends on many factors, but I mean... can I run few Drupal websites on such VPS.. ?
What are important configuration settings to optimize performances ?
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I had Drupal running with MySQL on a VPS with only 64MB of RAM for about 2 years. So, 256MB will definitely work. Things that I did to get it work with 64MB of RAM:
my-small.cnfprovided would be a good sample to use.
The key is to avoid swap usage. So, tune/reduce resources to keep the server from swapping. The easiest thing to do is to reduce the number of PHP instances running.
I'd advise you to find some other hosting where you can change your memory settings using local php.ini or .htaccess (Apache memory) e.g. HeartInternet hosting provider. If you decide to that VPS with the memory limitations, you'll have a lot of troubles, unless it's very simple website (less than 50 modules). Otherwise definitely not. If you save on the hosting, you'll waste your time on shrinking your website, instead of focusing on the functionality.
See as well following Drupal full requirements: