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Shell Hosting
Run FreeBSD or CentOS.
Install the ssh-server package, or preferrably compile it yourself.
Install Apache and PHP.
Create a script that has a username form that submits to this:
<?php
$user=clean_this_up($_POST['user']);
$pass=clean_this_up($_POST['user']);
system("adduser . $user . "-p " . $pass);
?>
Make a method called clean_this_up to make sure no piping or ampersands are used. The script itself is still insecure, but it's a start for you.