I was recently working on a new site for a client that is hosted on 1and1 hosting. For the most part the install went smoothly. There is no cpanel or similar quick install on 1and1 so you need to know how how to install WordPress manually.
The one issue that did happen is that the plugins would not update via the link in the admin area of WordPress and I was getting a server 500 error when adding the NextGen Gallery plugin.
To solve the issues :
Find your .htaccess file in your root folder. Then add the following code below the # END WordPress line.
Options All -Indexes
AddType x-mapp-php5 .php
AddHandler x-mapp-php5 .php
Save the file and it should work.