a $7/month 1gb VPS is going to be really oversold in ost cases. My 128MB VPS is $3 a month and runs my MyBB forum great.
Apachebench on the 128mb VPS to a static page:
Document Path: /index.html
Document Length: 1046 bytes
Concurrency Level: 100
Time taken for tests: 0.843 seconds
Complete requests: 10000
Failed requests: 0
Write errors: 0
Total transferred: 12630336 bytes
HTML transferred: 10510208 bytes
Requests per second: 11867.44 [#/sec] (mean)
Time per request: 8.426 [ms] (mean)
Time per request: 0.084 [ms] (mean, across all concurrent requests)
Transfer rate: 14637.67 [Kbytes/sec] received
$7/month for 1GB is beyond just oversold -- at that price, it's probably an outright scam -- e.g, the server was stolen, your memory is all swapped out, /proc/meminfo is lying to you, or something of the sort. prgmr.com is one of the cheapest VPS providers I've ever seen, and $7/mo only gets you ~192 MB with them. While I'm sure they do leave some room for profit, it beggars disbelief that anyone can provide actual service at a third of their (already low) prices.
I have had my share of cheap VPS's and in my experience you can find good value at $7/box. Rule of thumb is to go with Xen PV and to always pay monthly. There are some exceptions. For example BuyVM has a $15/year offer for 128 MB that is not oversold.