The terms VPS (virtual private server) and VDS (virtual dedicated server) refer to ways of virtualizing physical systems into smaller virtual systems, each with a separate operating system and separate resources. Although there are many similarities between virtualization technologies, there are also notable differences between them. It is only with KVM technology that your virtual server will run and behave like a dedicated server even though it is a virtual system. KVM virtualization, which is used to run virtual dedicated servers, offers superior performance and reliability over other VPS technologies.
A VDS is the only way to run a fully isolated operating system. One of the main differences compared to a VPS is the ability to run any type of operating system. For example a VDS can run any distribution of Linux, BSD, Windows or even Oracle, offering great flexibility in choosing or switching to another OS.
The simple structure of a VDS creates an easy to scale platform due to perfect isolation and easy migration and upgrades.
Unlike a VPS, which sometimes does not allow proper isolation of hardware resources, like the storage-subsystem bus, a VDS will behave more like a dedicated server in almost every way.
A VPS will ofer better performance compared to shared hosting, but is more prone to resource starvation than a VDS. This is most obvious when a VPS is generating a high load which is sometimes infulencing other VPS servers. This does not happen in the case of a VDS which will always running in its administrative parameters and as such VDS owners will not face such issues.