what modules are you using. If you're using smartsection you WILL have problems

Why don't you change your hosting and get unlimited business space.Check name cheap, host garter, go-daddy and others

i think the point is to optimize xoops core and functionality.Not to find another host that will support heavy load.

Xoops is indeed making a lot of queries in the database.

I recently (yesterday) had to change my php memory limit to 64M (from 32M) cause it was randomly exceeded by showing the home page of a site with 19 blocks (3 of them custom html) + the banner + debug for admins.

All those blocks query the database 93 times (used to be 102 queries). And right now I'm working on optimizing each block's and module's queries to decrease that number as much as i can (by creating unions, joins etc).

Caching is a good option but sometimes data changes and the site is just showing the cached information not the updated.