I use my home computer for this purpose. There is a simple WAMP setup on the main OS (winxp) for quick and dirty stuff, and then I have VMWare running a 512 MB

I use my home computer for this purpose. There is a simple WAMP setup on the main OS (winxp) for quick and dirty stuff, and then I have VMWare running a 512 MB RAM image of Ubuntu Server to let me play around with more interesting stuff. So the cost is effectively free. If something then turns into more than a personal project, I use the home setup as a development/staging server and then push it out to a hosted server.