Which low cost server device is compatible with iOS VPN on demand?
A Cisco box is not required, as there is the open source StrongSwan.

Only a device that is able to run Linux (Debian, Ubuntu, etcetera) is sufficient.

FreeBSD or MacOSX are not ok as those builds only support IKEv2 only, and the iOS built in client needs IKEv1.

Here is how to setup the iOS device for StrongSwan:
http://wiki.strongswan.org/projects/strongswan/wiki/IOS_%28Apple%29