I am looking a hosting around 500 email accounts. The usage will be similar to most home ISP mail boxes. Would I require a dedicated server for this or would a VPS suffice? Also, at the moment I am using a reseller account which requires clients to type "username+domain.com" for their username. Will a ded or vps allow them to just type "username" instead?
Whilst I realise the DED would be the best at the moment I am aware of the costs of a properly managed DED.
The VPS I was looking at would be a guaranteed 128MB RAM and 256+mhz CPU time.
The DED I was looking at was Celeron 2.4 with 512MB.
EDIT: It would not be used for anything other than mail serving.
It sounds like your cPanel with the username problem. If you can manage to do without it, login can be changed to just "username" without the additional "+domain", just set up whatever webmail script you will be using to do so.