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Yes, I agree with Stickman. You probably will experience some performance hits under a heavy load and if you are using GUI interface (run level 5). Might be more beneficial down the road to add some more ram and change the run level to say 3.
I would also comment that you should look at a minimal install... services and cron jobs and what not could degrade the performance just as much as a bit hit from the net. So, yes it will work fine, but your going to have to do a little planning to be sure.
I saw that you use Debian, which is a good, "light" Linux distro. Slackware is also a light, quick distro. Something bloated such as Red Hat, Mandrake and so on, might slow the requests to the server a bit.