I've decided to build a distro. I will most likely build it from scratch, probably take a look of Linux From Scratch for the basics of setting up a system (LFS being a very unique distro, I'm not sure if LFS dirivitive is the right term). (partially to learn how it's done and more about linux internals). It will most likely ressemble Slackware, this being one of my favorite distros. I'm building it mostly for personal use, so it won't be anything fancy (a REEEEAAAALY SIMPLE installer). So, here are my questions: Building a package repository is completely out of the question, simply becuase I don't have a server or the money for that kind of bandwidth, which repository would be good to use (Gentoo, Debian)? Also, any suggestions for software etc. would be great.

I do not want to discourage you, but please look at the 300+ distros listed on Distrowatch and tell us what you will do that is unique and different......
I can think of lots of ways of contributing to the community---creating another distro is not on my list.

I'm doing the same thing, I'm pretty much done now though. I started with Arch as I love the physical distro itself but dislike just about everything else. I didn't use LFS as I believe I have enough knowledge after skimming chapters in the LFS book to pull it off. I took the Frugalware version of pacman and hacked away at it and removed a bunch of stuff I didn't want. Darcs is great for this as I can maintain my own branch but still apply any patches the Frugal devs create that won't mess with my changes.

I wouldn't recommend using package from another distro, messy maintaining two branches etc. Make your own and who cares about maintaining a repository for others? Chances are there won't be many people using your distro and for those who do and for your own ease of use, take the time to write a good shell script to interact with a repository of buildscripts. That way if someone does use it and wants to install something extra, they have easy access and tools to build it themselves. If magically later on your distro picks up followers scab for donations to pay for hosting and a build server.