Since this has gone SERIOUSLY

I'll add my 2 trias...
Ubuntu wouldn't be my first choice... but it really all does come down to packages and keeping them up-to-date... any non-essential packages should be disabled, thus not requiring any RAM.
Also, 2 GB for a dedicated server machine is usually quite adequate, unless there is a LOT of database activity. Where there is substantial database activity, the more RAM that can be dedicated to holding queries or buffering harddisk reads is going to increase overall performance.
Now, with that said... who knows what is wrong with the server right now... nobody has given a definite diagnosis. Wild speculation seems to be a substitute for in-game RP at the moment though...