My server hardware at present is 4GB DDR3 with an AMD Athlon II X2 CPU, running Debian 6 / Squeeze in low-profile mode to keep the power largely unused. Minecraft runs with a dedicated 2GB and its world is loaded to a RAMdisk for faster processing. Also, all the plugins which can do utilise MySQL for faster response times without having to wait for I/O from the RAID.
It's using a significantly tweaked version of Bukkit's init script to keep it up and make all that happen properly (wasn't happy with its existing ramdisk or screen stuff, so I changed it).
Hardware itself is important, but far more so is how its harnessed to provide services.
Edit: My server's weak point, however, is its connection to the outside world. BT residential broadband just doesn't cut it for large operations; after so many connections, things slow down a lot. Last I checked my upstream was around 750Kbps. :dry: