What is the best way to manage a VPS Server?

There are two major types of VPS hosting: managed and unmanaged. So, a perfectly good answer to your question is to get your webhost to do the managing part for you. When getting a managed VPS, you're usually paying more for some kind of control panel and tech support by email and/or phone.

An unmanaged VPS costs less and usually doesn't come with a control panel and the same level of support -- and sometimes it won't even have anything installed other than the operating system. That's where the Virtualmin comes in. The Virtualmin install script is a big time saver and installs everything Drupal needs.

The unmanaged VPS hosting from RimuHosting, by the way, is a bit of an anomaly. Rimu's customer service and tech support are so good that it's hard to tell them apart, and Rimu's is as close to managed hosting as you're going to get without paying for the extra "managed" part.

Anyway, everyone does it differently (and some do it very differently) and what we often do at my company is get a bare bones VPS from Linode, Slicehost and RimuHosting (referral links are on my Drupal.org profile, thanks!) and install Webmin and Virtualmin. These are comparable to cPanel and WHM, respectively.

I presented on this at DrupalCamp LA and am hoping to present again at BADCamp next month:

   Drupal and Virtualmin: Managing Servers Without Excruciating Pain
   http://2010.badcamp.net/node/15

If you're going and would like to see the session, please consider voting for it.

As a disclaimer, Virtualmin (the company) is a sponsor of LA Drupal, but I want it to be clear that I've been using and recommending Virtualmin (the software) long before I approached them for sponsorship. When I started using Virtualmin years ago as part of a larger strategy for rapid website deployment, it really helped me take things to the next level.

@christefano: cool profile pic!
and thx for this writting.