running a cron every hour will, amongst other things show people online when they are in fact not. If you have notifications set to immediate then you will only get hourly notifications.
It doesn't need to run every minute. I had a host that ran every 15mins and there was little impact on site/user experience. The more frequent the better...
It is a social script that does rely on up to the minute info on user activity. If your host cannot provide you with an acceptable solution, move hosts.