I am starting to like VPS machines, my only problem with them is that as they are an instance and not a physical machine there is nothing stopping rogue workers copying your machine and taking it home to dissect it if they wanted to, that is the reason I stick with physical boxes for anything serious!
Anyway, 1GB dedicated RAM is enough for a decently powered Linux VM. I have a couple of 256 / 512 MB ones and anything more than a couple of sites on them and they struggle (Wordpress type installs, not static sites) so with a full-blown Windows one I guess you will need a bit more.
The 1 and 1 machines show dedicated 2GB and up to 4GB burstable so looks like should be an OK solution. At £30 per month is much cheaper than buying a dedi as well. Worth a tickle I reckon!
One of the handiest things I have found with VPS machines is the speed in which you can re-install. Was working on a shell script last week to do most of the leg-work for me in setting up new sites, did not specify an absolute path in part of the script and when ran in CHOWNd the whole OS to the web server user. Took me a minute or two to work out why MySQL had stopped working
Machine was re-images in 5 minutes and sites set back up in 15. Would have taken a fair bit longer with a "real" server.

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