Dell mention that they compared a single E5520 to a single E5504. Two E5504 would have been faster.
Another concern I have about the E5504 is the small cache memory - only 4MB vs. 8MB for E5520. Is this a serious concern?
4MB for 4 threads on the E5504 vs 8 MB for 8 threads on the E5520. Two E5504 will have a total of 8 MB of cache for 8 threads. I may be wrong, but that looks quite the same to me. If you're going to use such a low-end hard disk, then why are you worried about the processors? You DB isn't large if you only need 250 GB for everything.
If the server supports SAS drives and if it has a SAS RAID controller, then use 10K or 15K SAS drives in a RAID 1 or a RAID 10 (much faster) configuration. If the server only supports SATA drives, then you'll probably be limited to 4 drives in a RAID 10 configuration. That will be better and faster than a single hard disk.
How fast is your Internet connection?