Yeah the main difference here is that using a hosted solution means you're probably paying for a direct indial / line for each extension. Given you won't be need to make 20 simultaneous calls, that's probably unnecessary.

I've been looking at this for Australia so different market but even for a hosted solution I can get 20 external lines for A$240 with 40 direct indial numbers. That's about 1/3 of your cost for a hosted PBX. 8 lines/20 DIDs is only A$140.

Otherwise buy a prebuilt PBX appliance like John linked and you can have basically unlimited extensions. You just buy a number of direct indials / lines that you need so if only 2 calls are ever made simultaneously you can keep the cost much lower. As far as the VOIP provider is concerned they don't even know how many extensions you have then. Your monthly cost can be a lot cheaper then with an upfront cost of hardware. You do need to support that though which can require a little bit of setup time.

If you want to roll your own there are a number of Asterix distros like Elastix. http://www.asteriskexchange.com/listings/category/60