I don’t know how much you should be using, but I can tell you that whatever amount you’re using now isn’t enough, because of the error “OutOfMemoryError” that you’re getting.
That said, using Lubuntu uses up additional resources that wouldn’t be used if you installed a distro that did not have a desktop. That doesn’t mean to use Turnkey, but there are many alternatives to Turnkey that do not have desktops and would be well suited for a server installation.