First let's look at the difference between vps and dedicated

VPS or Virtual Private Server

VPS is a section of a dedicated server, hosting companies take a dedicated server and split it in to several sections by using Virtualization software, so Each server acts as if it is an actual dedicated server, only the hardware is shared. Which results in lower performance.

Dedicated server

Dedicated server is only assigned to one user, it is an actual machine, an actual server to do what ever you want it to. All of the hardware, software is yours to use. Another word you are the master of the server.

So which one do you need ? Dedicated or VPS?

To answer this question, there are two questions we need to answer first.

1. What is your budget?

the starting cost for a vps can be as low as $20 per month, as for a dedicated would be $80 plus.

2. Traffic

Generally speaking, the biggest disadvantage with VPS is its CPU. So if you have a large site that doesn't generate huge amount of traffic , VPS will do the job, and on the other hand if you do have a large site that brings huge amount of visitors, than Dedicated server is your choice, Some vps hosting services will notify you immidiately when your bandwidth (traffic) usage has exceeded a percentage that is set by you, such as vps.net.

Conclusion

Dedicated server has a lot of resources, it is generally used by customers who have a high usage and VPS is used by customers who want to have the same features like a Dedicated server but do not have the usage So if you wish to have features like a Dedicated server but do not require the resources assigned to it, then you can surely consider a VPS for yourself.

and

If you are on shared hosting, and you are thinking of increasing your site's performence, it is a good idea to start off with VPS, and once the traffic start to increase, you will need to upgrade your vps plan which might cost the same as a dedicated server, than it just makes sense to get a dedicated. But of course, if you are happy with your vps, and even though you are paying the same as for a dedicated, you might just consider to stay with it, as the saying goes "If it is not broken, don't fix it"

Hope this post helped, and if you are wondering which vps hosting provder I am using, here you go