Starting my own hosting company

personally 2GB of RAM classifies as a desktop machine for me..because that is pretty much what the optimum computing horse power is these days...Server talk starts with 3GB and upwards..

Then are the SCSI disks and stuff...response time is very important for servers..

Actually depending on what you are running I found RAM to be way more important. I still have one old Compaq P3 800MHz, but it has not 3GB of Ram which is its max, it run very fast for IIS, ISA and SharePoint +SQL Express 2x. Sure it's not the ideal but as far as IIS goes I found Ram to be very important considering persistant caching and dataset are all stored in memory.

I find the same, it's very rare on most of the web servers that processing power goes above 20%, most of the time it's almost registering, but the amount of memory used is in the gigs.

The only server that requires more processing power is the mail server and that's because it's running virus scanning on emails as they pass through the Mail Transfer Agent, even then it does top more than around 60% for a few seconds at a time when a big influx of emails come in at one go.