By localhost server, I assume you mean web server?
If so, there are multiple factors you have to take into consideration.
What programming languages, if any, do you want to serve?
What operating system is the web server being run on?
Is it going to be solely for a development environment or will you put live(production) websites on the web server as well?
If your website is live, how many unique hits / month do you expect to get? This really only matters after a certain large threshold.
Whether or not you should use PHP or another programming language is a different discussion and thus should not be discussed in relation to the original question.