Debian 32 bit Linux Or 64 bit (I don't have over 4gbs of ram 64 bit does not matter to me.) Also 1.5 GB of ram on my vps can hold 20+ players at the same time.
Java 1.6.0 (You have to update Debian first to get this version. Other wise it will install 1.4.2)
Xubuntu 64-bit (with `gdm`turned off most of the times). Also, 1GB of physical RAM is in the "server", but only 768MB is allocated for Java. Java version 1.6.0_21 downloaded directly from Java's Oracle's website (because apt-get's version sucks).
Windows Server 2008 Web Edition 64-Bit
Latest 'standard' Java version.
on our server we have a max player cap of 40 people with no lag, we might push it up later once minecraft gets a bit more stable, but we always have at least 30 people playing, again with 0 lag. im not the owner of the server however, im an admin on it, but i can post the spec's if you want