I beleive their is a script that allows the host with root access to allow resellers to create reseller accounts. I beleive a VPS would be better. At the least.
Dedicated server is where you might have a chance hosting more than 20 people. A VPS can't handle it, unless you're planning on spending over $100 a month, theres dedicated plans under that price, it may be a measly 2.8GHz, but it's better than a VPS any day.
2.8GHz isn't that measly actually..