Sensible Performance/Growth Strategies?

[Raina Gustafson]

I'm looking for advice on how to get the most out of my servers, and
am looking for information on the advantages/disadvantages of various
strategies.

Right now, I have a production (ve) from Media Temple with 1GB and a
development (ve) with 512MB. I'm running one installation of Magento,
and get between 100-300 visitors per day. My traffic is directly
proportional to the number of products in my catalog, so I know that
as I add more products I will receive more traffic. Obviously, it's a
humble little operation right now.

Last spring, I naively set up Apache with APC Cache and Varnish, not
realizing that it wouldn't support SSL without further intervention.
Since Nginx can support SSL with or without Varnish, and since it has
such a great reputation for performance, I made the switch.

On the production server, I just have Nginx running by itself right
now while I work out a better system. I installed APC on the dev
server this morning, which seems to be helping with PHP memory
consumption. I intend to install Varnish as well, and should attempt
to optimize MySQL, but thought I'd consult the community before
proceeding since I'm not completely confident in the path I'm on.

I don't really know how to weigh the pros and cons of creating a more
complicated system vs. paying for a more powerful server. Nor do I
understand at what point I should start considering memcached, load
balancing, etc. There are likely more appropriate steps between where
I'm at now and those solutions, but I'd love to have a plan of action
established for the future.

Any thoughts? Any resources where I can further educate myself? Thanks!