I have used in one of our servers, wich has a:
Celeron 600Mhz
512RAM
Running RedHat 7.1
Oracle 8i
Postgres
aolserver 3.2 & 3.3 + ad stuff
and a couple of middle sized sites in production state.
I haven't had problems like you said, I would say that we have been running with this configuration for more than one year and I won't change it, anyway, why you don't try quickly with redhat 7.1, maybe is a specific OS problem? I really don't know.
