Depends on what your doing with your VPS, I guess.
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You're mainly looking for extra CPU. I usually never use more than 3/4 of the RAM I have.
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It totally depends on the purpose of your VPS. In our experience, for most users 256mb is enough.
Basically every application you use uses a bit of RAM. Particularly databases use up a lot of RAM, and certain other applications to too. However as long as you don't use up 100% of your RAM, there will be no difference in performance (regardless of whether you have 256mb or 512mb of RAM).