[...] something like calculating pi to the last digit
Man... I've always wanted to know what the last digit of pi is. Can you post it here?
Besides, I wouldn't call calculating a lot of pi's digits or generating reverse lookup and rainbow tables for "normal usage".
[...] so if you think you don't need 400-512MB of ram then shared hosting would be the better option.
What makes you say that? What if you want to run custom services like your own SVN repository? What if you just don't want other people on your system for security/stability reasons? What if you just want to manage your own software or don't want to have to go through the hoops of various control panels to do something you can do efficiently from the shell?
The minimal required RAM for a desktopless Debian install is 64 MB RAM. The recommended minimum is 256 MB. If you don't install some bloated cPanel or whatever (or even worse, a desktop environment), you'll do just fine starting out with 256 MB. To be honest, I don't see the point in paying for more when you can upgrade at any time you want.