My preference for a good server OS is Debian (stable branch, currently Sarge). My friend prefers FreeBSD (which is another unix like OS).
As for what to put on the server, it depends on what you want to do with it. It can be an internet server, ftp server, mail server, file server, firewall, internet gateway, proxy, etc, etc.
If you end up using Debian, checkout
http://www.aboutdebian.com/ and
"The perfect Debian Setup". Note that the last one is a bit dated...