I would use one instance, as it will be more efficient without loading up the OS yet again. If you tune everything right you can get down to about 50-80MB of ram usage without any of the services running (ie just booted). Then tuning MySQL and the web service you can probably keep it under 110MB of ram usage overall. The OS will then use all that wonderful memory to cache files, programs, etc. Make sure to use drupal's cache (to reduce queries) and some form of php caching (XCache, eaccelerator, zen optimizer, etc).