I would rather prefer more ram, especially if my visitors are international. Even if they are not, I would most properly prefer better hosting. But it really depends on the web site. More RAM will definitely help.
Internal tests show around 400mb usage right now. We are preparing some great improvements for the 4.2 release though.
How much does FrontEnd and BackEnd contribute to this 400 MB. And is there a large difference if you have 1 or 4 people working simultanously back-end and/or if you have 10 or 100 visitors at the same time
Most of the memory is consumed in the backend operations. Once these operations complete - most of the things are cached and the front end should work nicely. There should be much difference between 10 and 100 visitors if the pages are cached. If they are not cached, there will be difference mostly on the CPU usage.
With the 4.2 release, we are going to do huge improvements to the Sitemap, which will reduce the memory usage both in the front end and the back end.