Time to get a dedicated server?

Well, after the launch of my newest site (Proxytastic.com) which was supposed to deliver a free webbased proxy for people who are unable to access certain sites from the workplace or school I find myself unable to keep it up as I’m getting constant warnings of the admins of my hoster (Dreamhost) that the resource usage (namely CPU time used) is way to high for a shared server.

I guess this is true, because such a site is just a resource hog when it comes to cpu usage and believe me, I tried every major (free) solution (PHProxy, CGI Proxy,…) – to no effect. Now I’m faced with the question: Should I shell out some major cash to get me a dedicated server or not? While I would love to have my own box (and cpu for that matter) I’m not to keen on paying another bill every month, especially due to the fact that I’m totally satisfied with my current hosting (Dreamhost) and it’s provided service in respect to the asked price (on another note: I already payed one year in advance with a major rebate). Decisions, decisions. For now I’ve taken the script off the server to avoid getting more techical support mails in my inbox although it hurts me as the site was really picking up traffic really fast (around 900-1000 uniques per day) – maybe I should have a closer look at the income (ads) the site might bring me and consider getting a dedicated or managed server…

Question to the readers: do you have any experience with dedicated servers (hopefully positive ones) and can get me a recommendation for a provider? (Currently I’m looking at offers from the major german providers (like 1&1 and Strato) with servers starting as low as 19.99 Euro/month (for a Sempron 2200+ machine – although I’m not sure how good this would be for one, not to say many, resource hogging site(s))

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