Question: One of the things I'm absolutely unclear about is the limitations on data transfer. Is 1 Gb per month enough? Is 500 Mb enough?
Answer: I would like to a word of caution from hard experience with bandwidth. My site gets about 20gb/month of traffic, which is at the outer edge of what most shared hosts will support. I was on a plan for 37 gb/month and $6 per gb over, and I thought that was enough. I was thrilled to get some articles published on high-traffic sites, until I was shocked to find my bandwidth for the month at 100gb! That's a lot of cash to have to come up with. Fortunately for me, the hosting company had a crash and lost the statistics for the month (at least that's what I think happened) and never billed me for the overage.
During the Sept 11th aftermath, many tribute sites found their bandwidth in excess of a terabyte for a couple of weeks! I've talked to people with bills of over $2,500 for that two week period! I remember one person that got a $1,500 bill from his FREE site because he hit 200gb from his flash tribute!
My advice is to always find a web host which provides all of the services you need, plus is stable and performs well (these are the number 1 concerns, since what good is a web site if no one can visit it), and has as much bandwidth in the plan as possible. If a company offered 1gb/month at $7.95, 2gb @ $14.95 and 8gb @ 29.95, all with $7 per gb over, I would take the 29.95 plan without hesitation, even if my site only got 500mb/month.
Of course, if you keep a sharp eye on your server logs you could go with the plan that matches your needs more closely. If you saw that your bandwidth was getting higher, you could quickly upgrade to the higher cost plan. Most hosting companies will allow you to upgrade at any time (you are giving them more money, after all), but you should read the terms and conditions first.
Why? Your site could get popular, or, for example, the Nimbda virus added several gb a month to many sites. You need enough to cover the unforeseen circumstances. Remember, also that some people use "offline" browsers which download a whole site - and that can really inflate bandwidth. Spiders also can hit very hard.
On a side note, never, ever use one of those "unlimited" bandwidth plans. I personally prefer knowing the limits rather than having someone arbitrarily say "well, this site is too popular so pay up or shut down".
There are plenty (hundreds at least) of web hosts out there with good plans with plenty of bandwidth. Take your time and find the one that is a good fit for your needs - but make sure you get enough bandwidth to cover all eventualities.
Unless otherwise noted, all photos and text is Copyright © Richard G Lowe, Jr.