I've got a VPS server that is hosting a very low traffic server for an iPhone / Android app. Probably handles a max of 300 very small JSON requests per day (a KB of text per request at absolute most), and the server sends a max of about 50 emails. These numbers are likely to grow but not substantially and incrementally. The reason for going with a VPS initially was not for capacity but flexibility and reliability reasons. It is critical that the emails are sent immediately, so we didn't want to rely on the hosting provider which may delay etc. Also, we wanted the flexibility to run non-standard applications on the server, for instance Spatialite (variant of Sqlite) to help with location-based queries.
So to my question...... I am about to set up a very similar server for a different app. Given that I am using a fraction of the CPU (I currently have the smallest Linode, 512MB RAM) and bandwidth or the current VPS, is this still the best way to go? I was thinking of lowering the spec, but to my (perhaps naive) mind even 128MB seems like overkill, although those packages seem to have drivespace that is possibily a little too small for our needs. Also, I suppose once you get down to a certain level of cost, say $7.50 / £5 per month, there is very little room for a provider to lower prices as it may not be worth their while from an admin point of view. I can appreciate there may be no market for "extremely" low capacity VPS. Can shared hosting be ruled out?