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@yomero: you can do nested virt on DigitalOcean?
http://puu.sh/hkNDF/9da8800af9.png
Yes. I found it when the virtkick team recommended to deploy it to digitalocean.
But particularly if you are interested in... let's say proxmox, which is what I use, you can use kexec
https://www.alextomkins.com/2013/11/digitalocean-debian-kernel/
http://0wned.it/2014/08/27/custom-kernel-on-a-digitalocean-droplet-the-right-way/
The problem with the 2.6 kernel, is that the nested flag isn't supported in the kvm_intel module. But if you want only kvm, you can use the test 3.10 kernel.
Or use another virtualization panel/library (virt-manager maybe? If it's for personal usage)
I once ran Proxmox on a DO droplet, worked just fine
Why don't you go with http://crowncloud.net @SpeedBus might help you. I am quiet happy with service.
Interest with this KVM nested supported too... just want to use it as a dev server...
I'm happy to support nested KVM. I can come up with a price that works for you. I'm not going lower than $5/mo but you'd get a 2 cores, 512 MB ram, console access, 5 mbps unmetered BW, 20 GB hard disk (I can do more).. I've installed both OpenVZ and Proxmox inside KVM VM's so they should be fine.
PM me skype or AIM info and I'll get in touch.