Here's a minimalist entry for nsd.conf for low-end boxes. (Known to work on VPS with only 192MB RAM.)
~ Replace xx.xx.xx.xx with your server IP.
~ Change "secret" entry to unique random gibberish.
# nsd.conf -- the NSD(8) configuration file, nsd.conf(5).
# Copyright (c) 2001-2006, NLnet Labs. All rights reserved.
# options for the nsd server
# the database to use
identity: "Name (NSD) Server "
# log messages to file. Default to stderr and syslog.
# Number of NSD servers to fork.
# Maximum number of concurrent TCP connections per server.
# This option should have a value below 1000.
# Maximum number of queries served on a single TCP connection.
# By default 0, which means no maximum.
# File to store pid for nsd in.
# chroot: "/etc/nsd3"
# After binding socket, drop user privileges.
# can be a username, id or id.gid.
# The directory for zonefile: files.
# key for zone 1
# Sample zone 1 (forward)
Thanks to vpswing of WHT for his assistance.