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Have you checked the Dedicated server plans of limestone networks or iweb. I hope by this you could get a dedicated server from them. You could also customize the server if required. We are having servers from both the DC's and are happy with them
Due to the amount of diskspace required, Dedicated will probably be the least expensive option. A cheap low-end server, with alot of diskspace, and he can come in at half that budget even probably. Gives him plenty of room to add RAID, backups, control panel software, maybe even remote reboot/IPMI, and even still com in below budget...
You need a dedicated server when you want to use the server fully. I mean if you are operating some of the tasks that are based on applications that requires high CPU and RAM usage and fast connection then dedicated server is good for you.
You have to read thought all the providers TOS as some of the provider does not allowed File download site etc also DMCA issues.
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