Start with a low or mid range specification...if you get the traffic then go for higher specifications.
GO with Linux. Greater stability and somewhat complicated to use, though. Windows - Less Stable, Easy to use(easiest it can be, not that easy as running XP at your home PC)
You can opt for a VM based server. Many ISP are offerring VPS based on the VMware product line. You can start with a low-spec VM, and then up the RAM, CPU, HD space and bandwidth as needed, with little effort / downtime.