Server(s) configuration for high traffic image hosting site

Hello,

I'm currenly running an image hosting/serving website with an average of 35,000 daily visitors on a single dedicated server (dual2core, 4G ram, single sata hdd, 1Gbps port). Hosted image sizes vary from a few Kb to about 1.5Mb.

At the moment it seems that disk i/o is slowing down the site.

I did a lot of reading in the last days, but couldn't figure out what would be the best solution for an upgrade/infrastructure.

First, I would like to ask your opinion about setting up multiple servers, for the moment 2.

Should I separate the website from the static content(images) or run in load balancing between two servers with the same content?

Second, what server configuration would you suggest in any of the mentioned cases? Which one would be the better solution, or is there an other one that would fit the purpose better, beside a CDN? What hard drive configuration would work best?

Thank you in advance!