you wont need a merchant number if using paypal i think - will have to double check for you.

With regards to hosting 50MB of web space for your site, you may get away with it but the site will have to be designed with this in mind. ie, you will not be able to loadsa flashy images and adverts.

Another thing you may want to look into is becoming an Associate affiliate with Amazon.com/.co.uk as this will earn you money too and is another form of advertising