I also host sites that get quite a lot of traffic on a VPS with 128 MB of RAM with no trouble.
My main concern is that the Pi is powered by an Ethernet controller that is connected to the USB bus, and it might drop out in special circumstances
http://www.raspberrypi.org/phpBB3/viewtopic.php?f=28&t=3...
I also host sites that get quite a lot of traffic on a VPS with 128 MB of RAM with no trouble.