I second John, esp. as any money you spend on client machine memory will still be of benefit with a new server.
In a recent Post Bert walked through how to run speed test on the server and client machines to establish a *before* baseline.
After that , since you are a Dell shop already, I'd look at their lower end server configs 310 or 410. Bert has also posted about the 410 server and configs. If you go the Dell route, and want to talk to the Dell rep that I use for clients, just send me a Private Message (PM).
To save money on the software side, you might want to look at going with the MicroSoft Foundation Server, it will save you on software licensing, and still gives you a server OS.
