1) You won't need much of a virtual server, perhaps one with 1GB RAM, 20GB HDD (depending on whether you want to record calls or not). It might be just as cheap to go buy a machine at the store and host it locally to avoid a monthly cost.
2) You can use a VOIP line at the expense of quality, not to mention that if you have high call volume. Some VOIP providers may provide rollovers, but I've had more experience with 4+ normal lines and a 4 port digium card installed in the VOIP machine. So we'd have to check into that. The VOIP line or the normal lines with cost you monthly, so I would chose what is cheaper. Just remember that if you get normal lines you'll need to purchase the digium card which can be around $400.
3) You'll need a VOIP phone for each extension..
I can set up an automated attendant no problem. We can make it dial certain extensions for certain options, and even ring others after 4 (or 5, etc) rings. I have over 5 years with asterisk and over 10 with Linux itself.
I actually have a fully capable server hosted on a main pipeline in TX, I might consider letting you rent from me monthly if you got with a hosted server.
Please contact me if you have any more questions. I would love to do this job for you, my family needs the money!
Sincerely,
Karl Haines