This week I found out our moodle-server was NOT sufficient.
E-smith 5.6 (templated Readhat installation)
Asus P2BS board, P III 450, 2x9 Gb scsi in software raid 1, 256 mb. Serves nothing but Moodle.
30 simultane users did the trick: I could hear the harddisks before I opened the serverroom.
Upgrading to 1 Gb ram gave some relief, but it slowed down again at around 30 users. This time the CPU seemed the bottleneck.
I temporarily moved the installation to a 3GHZ Xeon Compaq, 2Gb ram today, in order to keep our users from leaving our Moodle Project. Seems to run smoothly now.
Did I miss some tuning?
On the other hand, you can outsource your Moodle services to http://moodle.com/hosting, and get a good service optimized just for Moodle and customized by the very main developer: Martin Dougiamas. It would cost you 100$/moth, but you would have all your hardware and admin problems solved.
Hope this helps.