Page 2 - Dedicated

If you colocate, it is cheaper in the long run. For $80.00 you will probally only get 1U with 2GB/monthly, from a good provider. If you deceided to colocate look at how many providers the facilities has, is it powered backup with UPS, fire supression system, temperature, will they ship your server for free, ect. ... just my $.02 on the topic.

2GB transfer? wow, then how do these dedicated servers offer 1000GB?

"Some" oversell the line. What do I mean? The provider provides a 10Mbps connection which is can substain at 100%, 3,280 GB a month. The provider subscribes 10 or 15 client with 1000GB of transfer a month and hopes none of them use that many. There are a number of post on webhosting boards that speak to this issue.
A good proviers will allot you the bandwidth you paid for and not sell that amount to anyone else. So if a provider had a Mbps connection and gave you 2GB then the provider would only sell 326GB.

It is clearly an issue of performance. If you want lots of downtime and high latency then go with a provider that oversells. This is not a new issue, there are lots of post on this 1 subject.