If you are willing to prepay 12 months, VPSLink‘s Xen VPS or OpenVZ VPS can be had for as little as $6.62/month, and they come with:
- 64MB RAM
- 128MB swap for Xen VPS
- 2.5GB storage
- 100GB transfer
- Seattle DC
And there are heaps of Linux distributions to choose from. It is a bit more expensive but VPSLink/Spry is a much reputable company in the VPS industry.
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They have a coupon code for 10% off for life at the moment too.