Listening to Scott Hanselman's interview with the Stack Overflow team (part 1 and 2), he was adamant that the SQL server and application server should be on separate machines. Is this just to make sure that if one server is compromised, both systems aren't accessible? Do the security concerns outweigh the complexity of two servers (extra cost, dedicated network connection between the two, more maintenance, etc.), especially for a small application, where neither piece is using too much CPU or memory? Even with two servers, with one server compromised, an attacker could still do serious damage, either by deleting the database, or messing with the application code.
Why would this be such a big deal if performance isn't an issue?