We recommend installing the Terminal Server on a powerful computer with 2GB of memory or more. For 10 Linux Thin Clients it's good to have at least 1.5GB on the Terminal Server.

Minimum hardware requirements for the Terminal Server

1. Modern Intel box (no older then 2006) that supports Linux kernel version 2.6 and above (AMD CPU's Work also). The more CPU's and/or CPU cores the merrier but one single core CPU will do nicely for 10 Linux users. No magic formula exists for recommended CPU power, each case must be evaluated based on the projected application and load. 
2. 1 GB memory (RAM) but more is better.
3. 20 GB or more diskspace, we recommend mirrored disks (i.e. Raid 1, 5 or 10).
4. Two 100Mb or higher bandwidth network cards of a reasonably common design (i.e. with Linux support). It's possible to get away with one card under certain circumstances. It's also possible to have more than 2 cards to distribute the load.
   
5. Have a screen, mouse and keyboard attached to Terminal Server plus a DVD drive. Remote access can be arranged for support.
6. A network that fulfills the CAT5 standard for the thin clients. The Thin Clients will do best with 100Mb or faster network cards.

For certified LTSP supported thin client hardware please visit this site. 

Here is a fine example for harware to run LTSP.