I can give you tips to do those optimizations if you want. (I've been running a 5 person server with no lag)
Very helpful topic. A few tips would be nice.
#1. Instead of running a vanilla Minecraft server or Bukkit server. Use an optimized version called Spigot http://www.spigotmc.org/
#2. Install Nospawnchunks and Clearlagg bukkit plugins on your spigot server.
#3. Set the pi's GUI memory split to 16. And of course run from console without Raspian GUI
#4. Overclock your pi as high as possible. (only if your not using a class 6 or 10 sdcard)
#5. Be able to deal with a bit of lag here and there. Especially when exploring (generating) new chunks.
#6 Use MC Edit to generate lots of the world on your desktop/laptop computer. Then copy over the pre-generated world.
Run the server from a folder on a flashcard/ other usb2.0 device. Especially if you have a slow sdcard.
#8. Tell your players/friends to stick together on the map. Its more fun and less laggy.
#9. Set the view distance in the server properties file to < 3. The lower the faster.
Ok. Thats all I got. Someone with 10 friends should try it out.
Hey, I have that many freinds that play Minecraft...
I'll check back with a status report eventually.