I've edited my post a bit, forgot you need to install a control panel for your users, a mail server, and FTP software, so you'll need about 200-300MB of RAM more count you'll need 1GB-1,2GB of RAM for all of that. So all in all, it should be enough for a small hosting, around 30 websites, MAXIMUM 50. The PHP processing would be slow if there are a lot of websites, because it's a really slow processor.

If you need anything else, feel free to ask