This is not accurate. There are many VPS's which are cheaper, many of which have much greater capacity for the money. Some are fly-by-night scams. Others have several years of stability with good support. Check forums and VPS review sites to find the best match.
That said, I have nothing against prgmr or linode and would use them if I needed a super-reliable VPS. (My main VPS is Linode, my secondary is with Kerplunc Hosting)
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.
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)
Using even 1GB of RAM for something like HN is just crazy.
I want to get one for me but I don't want to get rammed in the ass when I realize it is not enough and need to upgrade to at least 1GB.
I see I can get 1GB RAM at prgmr.com for the same $20
I run a Django-powered site on a 96meg host on an over-loaded Xen host built with ancient P4 Xeon servers (No VT instructions). I use nginx and sqlite to cope with my tiny amount of available memory. With that said the site sees little traffic (<500 hits a day, peaks ~60 hits in 1 hour), but I've never run into issues.
I also use chartbeat.com to see how the users are interacting with the site in realtime. They provide also two useful metrics: user load time and server load time. Looking at those, I can see that the user experience is pretty good, and that the server is up and responding very quickly.
" Good Afternoon,
At approx 12:10pm, we lost communications with some of our equipment in our Newark, NJ location. Upon investigation, it was discovered that equipment located in the cross connect area had lost power. Customers may have noticed degraded internet service for about 2-5 minutes while routers propagated through alternative providers. As of 12:23pm, power has been restored in the Newark, NJ site. We are still investigating the cause of the problem."
They do have pretty graphs, though!
(Hint: Check jlintz's comment above.)