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One of my favorite stories about this was from the guys at 500px.com.

When they first launched, their only server was a Mac Mini in a second-tier colo that was run by a friend of theirs. After about six months, they did their first major server upgrade - buying an external USB hard drive for more storage. They bought another two (and a USB hub) a month or so later. This lasted them another four months, until the got to the point where the USB bus was being constantly saturated. Only then did they move to some more enterprisey hardware.

Moral of their story was to use only as much hardware as you need now (while having plans on how to scale up in the short- and medium-term which don't cost you money now), and to worry more about getting users and building a product. Worry about scaling after you've got customers (and data that will show you actual use patterns), as opposed to paying for a complex scaling infrastructure before you've got any users.

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