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Try EDIS. I had a couple of VPSs with them and I was very satisfied. They're established and reliable.
You wish. Your encryption keys are stored in the RAM of the host node, therefore giving law enforcement two choices; either having the host dump the content of the memory, or performing a cold boot attack on the server.
Unless you at least have a dedicated server, encryption is somewhat useless. And even if you do, the fact that you cannot physically monitor the server 24/7, and instead rely on the hosting company/datacenter to do so, is still a huge risk that lowers the effectiveness of encryption altogether.
I don't care about law enforcement, I have nothing to hide. But I'm sure it more safe then not encrypting, if etc, somebody got access to the node or something, and then got access to my server.