I think that VPS can be used for proxies, and a dedicated server is not a requirement. In addition, I do not see any reasons why not to use VPS...

Proxy server use lot of resources of the server. If it's on a VPS then other accounts may get affected and as a result server will be down. To avoid downtime and problems, Dedicated Server is the best option for proxy hosting...

I'd say go with dedicated as well. They got some cheap packages out there, not as cheap as a VPS, but still pretty cheap...

From the initially mentioned the first criteria arises, which is price..

A friend of mine tried a proxy on VPS and had problems with his host several times, switched to dedicated. The main problem, as mentioned before is the performance for other customers. They'll complain, your host tells you you are using up most of the resources, the usual stuff. VPS isn't THAT much different from any other virtual shared accounts..

Nothing worse than getting problems once a project becomes successful...

StarkReality, this depends on the VPS configuration. Yes, initially, it is better to try something less expensive, and then if the business develops it is recommended to move to more stable therefore more expensive solutions. VPS is good for projects in the developing stage...

I absolutely agree with this, when the project is steady this will be better than while it is only being developed, prior it can be a platform before moving to something more expensive...

If the host knows what they're doing, you will NOT go into other people's resources. If you find a good VPS host you'll be taken care of..

If you get a dedicated, chances are you may not get a reboot panel, you may not get management, and will be on your own. Most VPS's come with management and a reboot panel, which would give you more control..

VPS Companies: ServInt.com, PowerVPS.com - In my experience those are the two to go with.

Dedicated: If you can handle stuff yourself, LayeredTech because their network is rock solid. However, you better not need help via their support - because chances are you won't get it.

I also have my friend who sells both of these if you want a custom quote, but first decide which you want! :-).

Hope this helps...

Thanks for all the answers people. From this thread and some I've read on other forums I think I will initially go with the VPS solution. If I run into problems with the server and the proxy network is profitable then I'll move it to a dedicated. I appreciate everyone's input...

Always ready to help, if you have anything special please ask...

No problem, owned (or had part in owning) around 5-7 hosting companies over the last few years...