Well,
You are most likely NOT limited by hardware. I just logged off WinVPS(1) which is the most "loaded" and it never peaked 25% on cpu usage for hours, it is a dual dual core AMD based server with 16GB RAM and Windows 2003 Enterprise.
WinVPS2 which is x64 Windows 2003 Standard, is the same hardware config except it has a 4 drive array instead of a 3 drive array.
In my EXPERIENCE, the only factor that would be slowing you down is RAM, and we run 4GB RAM in the SQL Servers, so yes, your speed is probably slower just because it can't gobble down the RAM like it does on the dedicated SQL servers. The other thing you have to remember is that on our shared SQL, it is the only process the server is running, it is 100% dedicated to that SQL process, where WinVPS or any shared server of any type will have to prioritize other processes.
We are able to run SQL Server at the highest cpu priority on a dedicated server, where even if you did on VPS, it won't be the only process running.
So in short, your ram is the only thing limiting, if we were to build out a VPS server with only 1 VPS and dedicate all the ram to this VPS, it would perform the same as a dedicated server.
The SQL servers we run are AMD dual cores, (just one, it counts as one for MSSQL license), with 4GB RAM and RAID1 SCSI setup. So technically VPS has more hardware backing than a shared SQL server, but the optimizations make the difference.
