A server can be handy on a network as anyone who works in an office will tell you. Many homes these days have more than one PC and a wireless network so it can be a very logical step. Like in a work environment, the server can provide useful services such as file and/or printer serving, media centre serving, web serving, web caching, account authentication and backup services. Because of the usually low number of computers on a typical home network, a home server need not be all that powerful. People often re-use older systems, and a spec as low as 1 GHz CPU and 256 MB of RAM can work OK. A large, preferably fast hard drive and a network interface card are usually all the hardware required. There are specialised Linux distros that can be used for this. Sounds like an interesting little project.