To answer the original question...YES...Dreamhost is very "Drupal Friendly."
Just to fast forward a few years. Now in 2010 installing and running Drupal on a Dreamhost server works perfectly! I know in years past people have complained about certain issues such as 500 Error pages, clean urls etc. But nowadays Drupal runs just as well as Wordpress on Dreamhost.
I've never run the Ecommerce Module for Drupal. But I have had success running the Ubercart module for Drupal with no issues. Also I wrote a tutorial recently that walks you through step by step how to install Drupal on your Dreamhost account the manual way in case that helps as well.