I'm not sure if this has been mentioned Pandy (haven't read all the replies), but you have to be careful with collocating. A good portion of data centers require a rack machine in order to host it. I'm not sure of your current machine's setup, but if you've got a standard ATX tower it might be an extra charge.
I've collocated servers before and it's a great deal as long as the company doesn't impose restrictions on you.
In reality, $100/mo is probably fine, although I'm almost 100% sure you can find something much cheaper. I'm not informed of your bandwidth usage, but I know there are companies out there offering 100mbit (burstable to 1gbit) metered lines on a Xeon CPU with more than adequate memory for as little as $80 - $90/mo. Sure, it's a $10 difference, but it's still an option if you're unable to collocate.
