My point is that out of the gate I'd rather have 2011 tools running on 1999 hardware than 1999 software running on 2011 hardware. A 2011 dev team will run circles around a 1999 dev team because their tools are better and allow them to iterate much more quickly. By the time your startup overwhelms a Pentium 3 server you should have enough profit to by new stuff.
Good luck getting a PIII to serve Ruby on Rails content fast enough to keep people interested and cheap enough to still make a profit from advertising.
I actually tried this recently. Page load speed isn't too bad at all, but the time it takes to start up the rails stack is awful. It's unusable for dev work.
