We rent a server from thegamehoster.net in Holland. I live in Sweden and there is no problem at all with the connections and ping. However, the setup for the server is not that user friendly, but You get good support from the guys at the company.
Most important is the fact of always having a slot on a good server and your friend there to race with them
It depends on the game you need. Some games can be hosted quite decently on normal shared gamehosting, for other games you really need a dedicated server. For GTR Evo we can setup a customized dedicated server for you, with GTR Evo preinstalled on one of our license keys.
If you contact the i3D.net support they can tell you all about our dedicated racing servers.