That's simply false. RAM is the constraint of interest for plenty of single-server websites that are running MySQL as a backend. You want a bunch of memory for the database, plus enough left over to accommodate your web app. That often means wanting a 2-4 GB machine.
Linode is something like $55/GB RAM per month, while prgmr.com is $14.
I remember a post on here saying how hackernews was running on a new 8GB server or something. There's no reason it couldn't run on a 200MB server easily.
(Related: Is HN really sluggish for everyone else as well? Like 3-4 seconds per page load)
If you really think you could run HN on 200MB of RAM, write a blog post about how to do it and submit it here. I'm sure the community would like to know how. I think your ability to write applications using minimal amounts of RAM is out of sync with the median RAM use here.
with a stripped down/custom distro and FastCGI perl i could make that happen. you could go crazy and use an epoll perl httpd too. backend would be nosql with a small cache in memory. you'd need a decent chunk of bandwidth as gzip may push cpu over the edge, and hope you have fast disks. how many hps is HN anyway, at peak?
I'm more concerned about bandwidth. prgmr is close, but not quite as cheap as linode when it comes to bandwidth.
Depends what your needs are though.