"Won't [the database] increase CPU activity especially with multiple hits."
Yes, but the CPU will be the fastest part of the machine. I would therefore look to the slower parts. What are you doing? Querying data and sending it over the network, mostly.
"Won't the raid also help by reducing disk drive contention between multiple requests?"
Yes. RAID is recommended. I never hinted not to use RAID.
"Also there is CPU overhead associated with software raid isn't there?"
Oh yes. Do your homework, pay a real price, and buy a respected RAID card.
"Am I just missing the point here?"
Your're looking at everything. Assuming your software is suitable, look at two things (aside from common sense like getting the functionality you need):
1) The most immediate bottleneck to the machine's chief function.
2) The cheapest ways to increase performance.
Going by #2, RAM and CPU are cheap to extend a little and both directly influence performance. An SMP setup is not, relative to these basic things, cheap.
Think about #1. Clearly, your bandwidth is limiting. It's the slowest part and yet the whole point of this machine relies on the network. The cheapest option is offsite hosting to improve this. If that's unreasonable, then bringing the bandwidth to you is relatively expensive. Depends on factors you have not shared related to your business plan (as a reoccuring cost, for one).
RAID is not cheap, but it's a multifaceted solution. IDE drives are cheap and storage is part of your needs. RAID can cut your seek times and that can be a bottleneck. RAID also can provide some stability and backup.
"Anything approaching T1 speed will cost $500/month."
That's one reason why DSL is so cheap, ironically (offset the cost of infrastructure to business). Some ares have DSL above T1 bandwidth, but it's not necessarily business grade lines. I probably would have looked at a hosted box. You're may be right in the middle where you need the extra performance and customized features beyond reasonably-priced hosting, but you also need the bandwidth. Still, even with 1Mbps you're talking <128KB/sec. We can safely call it really slow for a server.
The only other option I can see is using multiple DSL lines (not cheap and requires more configuration on your end too). Again, I would have explored hosting, but that's a different route. I never saw much economy in enduser hosting. Webhosting is nice, but you have to be a little savvy. It's not eBay though and there are some respectable companies (ask around off the Internet, check some rating sites, check Netcraft, etc.). You need to lay down a little money to have a good business relationship, no question.
