A small SYN flood.
It's a bit weird your VPS cannot stand 700 half-opened connection.
Unfortunately, there's nothing you can do at the server level because you are using OpenVZ. It uses a single kernel, every users share it so you cannot tweak it (/proc/net, /proc/sys/net etc).
In the future, if you have to face SYN floods again, go for Xen VPS for instance, at least you could fight back
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My host recommend that I try:
"Try with nginx as a reverse proxy and let us know how it works."
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Unless there were some major changes to the TCP protocole last night and no one informed me, before a packet can reach the HTTP server backlog there must be a 3-way handshake sequence. During a SYN flood you are stuck (and will remain stuck) in the middle of it. It is a kernel problem, not an Apache/Nginx problem. The only help you could get is from your hosting company but... it looks like it's going to be tough
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I think that the number next to the IP (in my first post) is the number of processes that that IP is using on my VPS.
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If they are in the SYN_RECV state, they are just half-opened connections, no processes. They are just filling up your kernel backlog and when it's full, your server drops any further packet.
What about the 195 ESTABLISHED connections ? Is that the average/normal traffic on your server ?