Originally Posted by callcommdavid
It's a Pentium 4 dual core 3 ghz with 1gb ram and sata 320gb hdd
I'm afraid it's not decent enough for the hardware specs you're going to need if you want to upgrade to a newer (or newest) distribution. Please see here
for Red Hat's requirements. A Pentium 4, to my knowledge, does not actually have a physical second core, some models use hyperthreading technology that makes the system see two cores, when there is actually just one. Kind of like a virtual core.
I'm not experienced with the server end of things but I think you're going to need to sit down with your boss and explain that what you're currently using will not be sufficient for newer operating systems that are not designed to be lightweight.
Whoops, hold on......
If you want to try keeping the current server, I just discovered that Debian might be worth giving a try. System requirements are here.
You can download .iso's here.
They even have 32 bit versions, which I'm thinking your server is.