Yup - but there's no reason (other than app developers making a mess) not to remove images which aren't needed.
So on install - from the app store or itunes, remove ipad assets if there's correct asset for iPhone (same with retina and non-retina).
It has to be done at some point because it's already getting ridiculous
If you have limited budget don't worry about retina. You're a developer, not a designer so that shouldn't be your priority.
Think about getting some used macbook pro, replace the hdd with ssd for system and apps, and super drive with case for hdd and put there some larger hdd for data.
The money that you save use to get more ram (and maybe faster ssd) and bigger display to fit simulators.
This setup should work for most cases giving you mobility, speed and space to work, when needed.
If you're thinking about hosting yourself it doesn't make any sense. If you think about collocation then it's better but in your calculations include the fact that hardware breaks and with dedicated servers you get it fixed for free, when you buy the server yourself you have to buy anything that breaks and replace it. Almost always it means more of your time spent in dealing with it, more time of your users with lower quality/no service and it adds to the cost.
Of course it's an option but you have to keep those things in mind. And before you do it I would search for some other provider of those dedicated solutions (or vps) before making that step