I was wondering about using two smaller servers vs just using one big one.
The two smaller ones would of course be using load balancing.

Are there advantages to one method over the other?
Is it smarter to do one?

To me it would seem two smaller servers with load balancing would work better, especially for the reason that if one server is down, the other could still handle all requests. But in this case, is performance sacrificed?

Pros and cons of each method?

I would just use 2 small servers, thats what we do. It all depends on the software you are running on the servers.

Advanage of one big server will probably be a little cheaper and less rack space and easier to manage one server.

Disadvanage is load balancing, software, cost a bit more and need to manage 2 instead of one.

If your just running small server apps with a web server I would go with one, but if your running an email server, sql server, web, ftp, dns then I would go with two.

Sure, if you are comfie with load balancing DO IT. There is rarely a justification for this type of complexity for most setups IMHO.

I prefer to keep things in one place with a comprehensive backup plan Even if you are saving a few dollars with one machine, this really ads up over 12 months time, etc.......