No advantage hosting in Iceland. Why not just encrypt all data on the VPS? If the VPS provider was required to provide a copy of the VPS, it would be useless to requestor.
On a physical machine, you have to plug in a dumping device into a DMA-capable port, cool down the RAM and move it to another machine as fast as possible, or reset the machine and boot it from another medium (hoping the BIOS didn't override anything useful). In many jurisdictions you also have better protections in regards to required warrants and such for your own hardware.