When should a VPS be used?
In most cases a VPS is useful for these three primary reasons, flexibility, isolation, performance. A VPS gives full server control - flexibility. A VPS gives isolation to your application, prevent other customers from affecting your site. With the higher level VPS plans, performance will be equal to or better than a shared environment. Additionally, added caching and other performance options are available on a VPS.
How many sites can I have on the VPS?
The number of sites is up to you, and depends on the server resources.