Probably a stupid question but hey, I'm new!

can I purchase a small instance (say, 512MB) and upgrade it to a larger one later on (say 2GB)?

Yep, you can open a support ticket and request to upgrade your plan.

Hello!

There is no need to open a ticket. You can do it yourself via the Resize subtab and a button: http://library.linode.com/upgrading

-Chris

Resizing is quick and painless, but it does require that your linode be moved to different hardware. It's all automated, but it takes a few minutes for the data to be copied from the disk on the previous host to the disk on the new host.

It's all pro-rated too, so if you upgrade and decide it's not for you, don't worry about downgrading back to the old size, you just pay for what you used (pro-rated to the day).

Thanks guys!

Also note that using your larger disk space (either expanding existing disk images or creating new ones) will require a reboot.