768kbps upstream doesn't give you much. If you're just using it for development purposes, that's fine. However, a production system would be choked by that upstream.
A quick example. 768kilo
bits per second = 96 kilo
bytes per second. That is a maximum which you will probably never reach do to protocol overhead and line conditions. But, let's assume 100 kilobytes per second upstream.
You can have 10 people downloading from you at 10 kilobytes per second, or 20 at 5 kilobytes per second. These are very low transfer rates and will lead to slow page loading times. 10 concurrent users is nothing either if you have an interesting site.
The hardware you mention is quite weak for dynamic sites. It will work, just very slowly. Clustering it wouldn't really help either because the hardware is still underpowered to server a single request for a dynamic site.
Now, you may see this as a bunch of nay-say, but don't let that discourage you. This sort of setup can work for development purposes. My company's development computer is a celeron 2.2ghz with 512mb of RAM on a connection with 110 kilobytes upstream. This works fine for a development environment. However, when you reach the production stage, you will want something better.
For the early parts of production, you may want to consider hosting somewhere like DreamHost (
http://www.dreamhost.com/hosting.html). You will get better throughput and a more powerful system for cheap.
From there you can grow to dedicated hosting or co-located servers. That will require more in-depth cost-benefit analysis.
[edit]
Regarding the T1 line - recently I was speaking to a friend who said the company he works for has a T1. He was complaining that their T1 (~1.5 megabits per second) was saturated and he couldn't understand why they didn't go with a business internet package from the incumbent cable provider. Apparently you get much more bandwidth that way for less than a T1. I can't say anything about reliability though.
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