Hi,
I only recommend 1and1 for dedicated server hosting, nowhere on this site do I recommend them for shared hosting.
Lots of people run mojoPortal on shared hosting though with no problems. Whether to justify the cost of a dedicated server vs shared hosting depends on what the business value of your web site is and what you plan to do with it. Up until about a year ago, this site, mojoportal.com was runnning in shared hosting at DiscountASP. When I decided to do ecommerce and was ready to open the store, I decided it was worth it to me to get a dedicated server. Part of my decision was just the comfort level of not having my site/store on a server with a bunch of other people having access to the machine and stuff running on it and part of it was just the fact that I had several shared hosting accounts and closing those and consolidating all my sites on one dedicated server actually wasn't all that much more expensive and gave me more overhead if need more sites later. I tried a VPS at first but it wasn't quite robust enough for all my sites so I went with a real machine for $120/month. A dedicated server gives you much more control, but it also means you have to be able to administer the machine yourself or have someone who will take care of it for you.
What I would do is make your decision about whether the things you plan to do with your site justify going with a dedicated server or not. If you aren't planning to do ecommerce or don't expect to make enough from ecommerce to pay for the server then it may be better to give it a try for a while at shared hosting. If it starts making more money or you find you need better performance then you can always upgrade later.
What I would do is try to cancel the order for shared hosting at 1and1 (mainly because I don't think it will work from what others have reported in the forums in the past). Maybe its different now but I have no confidence that it is. You could try to get it working, which you have. If you'd like to pay me to look at it and see if I can get it working, thats another option but there is no guarantee that I can get it working. If its just a configuration issue then I can solve it but if .NET 3.5 SP1 is not available I can't make it work. You could try shared hosting at DiscountASP or Seek.NET or CrystalTech but make sure you get a package with ASP.NET 3.5.
Hope it helps,
Joe