Regarding optimization techniques I mean you can replace DNP Portal based on DotNetNuke with DNP Portal - a standalong web application for hosting DNP UI mdules. Take a look at this post: http://forum.dotnetpanel.com/forums/thread/2436.aspx
There are many info regarding DotNetNuke optimization, but I can admit it's not an easy process and it involves many steps and requires much time.
Regarding server's RAM I can only say that more RAM your server has, more web sites you can host on it. On our servers every second customer runs DNN portal and 2GB of RAM is quite enough to host hundreds (!) DNN portals on a single server.
The first advice is uninstall all unnecessary software from the server. Secondly, VPS server with 1GB of RAM is not the same as PHYSICAL server with 1GB RAM. I've been noticed several times that VPS with the same configuration works slower (at least visually without running any performance tests) than physical one. I don't know why but these are my personal observations. Maybe it depends on virtualization software datacenter uses of whatever else...