I think you would be happier with 512MB at a minimum; it does depend on the kind of virtualization the VPS provider supplies.
If the VPS is fully-virtualized like Xen or VMWare, where the VPS is wholly a different machine, then the 256MB RAM size is too small as you want to have a little bit of RAM free for disk caching and other tasks.
If the VPS is partially virtualized with something like OpenVZ, which uses a single kernel for all VPSes but has barriers between VPSes, then the host OS will do disk caching.
What technology the supplier is using should never be a secret, so just ask them. Amazon AWS uses Xen if I recall correctly.
