There's a lot of ways to make a VPS suck, by not spending money where it's needed. An under-powered disk subsystem is probably going to contribute to these sucking (as Digital Ocean sucked in the beginning; not sure if they've fixed their disk bandwidth problems).
But, assuming they aren't horribly under-powered on any of the vectors that affect performance, this is a great deal. 256MB is just enough to run a reasonable web server on, even with a database-backed application. Two more servers for DNS, and one for SMTP, and you'd have a solid setup for a large variety of tasks for under 5 bucks, and you'd control all of your services and all of your data. You couldn't run a big community site with lots of users, but you could definitely run a blog (for potentially hundreds of thousands of visitors, depending on how you setup that blog) or simple site.
But, assuming they aren't horribly under-powered on any of the vectors that affect performance, this is a great deal. 256MB is just enough to run a reasonable web server on, even with a database-backed application. Two more servers for DNS, and one for SMTP, and you'd have a solid setup for a large variety of tasks for under 5 bucks, and you'd control all of your services and all of your data. You couldn't run a big community site with lots of users, but you could definitely run a blog (for potentially hundreds of thousands of visitors, depending on how you setup that blog) or simple site.