To start with go with the first option but with atleast 2 HDDs and raid-1. For offering shared hosting services, I would highly recommend you to check cloud offerings than dedicated servers. You will have cheaper startup cost, scale up and down depending on the orders you get, easy backups. Your setup will be more reliable.
The I5 4x 2.66+ GHz should be enough for a start, but as chennaihomie mentioned 2 drives in RAID configuration would be recommended.
For shared hosting service I would personally not recommend Cloud Servers due to low I/O read and write speeds. You are better of getting a dedicated server with either a SAS or SSD drive in RAID configuration. It will be little bit more expensive at start, but you will have a much better performance.
But that is what they offer! What about the cpu and disk?
If you are just starting to offer shared hosting, I would recommend starting small and expending.
Most hosting companies who provide shared hosting use Dual Intel Xeon 5520/5620 with 12 GB RAM and 4 x SAS 15K/SATA drives in RAID 10. But if you are just starting off, this server would not be the most affordable solution for you.