I'm shocked at the flood of bad advice given so far. Please disregard most of the comments.

Can you people not read? He only receives a few hundred hits a day, there's no reason the resource usage should be this bad. Whilst I agree that he should use a dedicated server, or high end VPS bare minimum for proxy sites, that still doesn't help or explain the resource usage so far.

To the original poster: I'd scan your access_log and look for malformed URL's to see if it's causing phproxy to hang or loop.