Site speed and other sites on your server’s IP Address matter.
Here’s what Google have to say:
“Like us, our users place a lot of value in speed — that's why we've decided to take site speed into account in our search rankings.”
Excerpt taken from:Google Webmaster Central Bloghttp://googlewebmastercentral.blogspot.co.uk/2010/04/using-site-speed-in-web-search-ranking.html
So what does this mean to me?Avoid cheap, shared hosting.
Shop around and don't take any old shared hosting that you stumble across. It could seriously affect your web site's performance and with that your business. You wouldn't settle for phone lines that repeatedly cut out and so you shouldn't put up with slow, overloaded servers which keep timing out.
If you are serious about your online business this should be a priority.