So, it looks like Apt is working and finding the debian repository just fine, however, the rackster server isn't working.
now that the obvious conclusion has been drawn, the tricky bit:
Finding a solution to a problem with rackster's repository is the hard part. Debian's updates will probably keep you secure and functional without the rackster updates but because rackster is a private corporation, I doubt that many people will be able to tell you what their line actually is. You might just have the wrong line so the best course of action is probably to contact customer support and ask them if you got the right line. You may even want to comment out the rackster lines for now so that you can update without being innundated by errors.