We were looking at options for a VPS as well but most are out of the general price range we are able to pay right now. Its not public access to the courses, you have to be in the class that is using it to even get a login. We bulk import usernames in from our Student Database (NCWise)
Like I said the max students at any single minute would be at most 30. There are 101 students enrolled now but that is acrosss 6 different classes at different times of the day.
I've bought the cheapie HostGator $7.99 per month hosting Moodle 2.2. I had 20 students all taking a quiz at the same time, I had bad latency problems and some students had to click the NEXT button several times.
I called HostGator and they did the hard upsell to VPS, but the cheapest VPS is $40/month. (They offer a $20/month one but you have to be a Linux command line expert and install Cpanel yourself).
I moved over to JustHost and I've had a class of 30 students taking a quiz all at the same time with no problems on the cheapest hosting plan.