Hi Shinu051.
A Linux machine is capable of almost everything. Nearly yesterday I saw a news about robots been delivered with a built in Linux OS. Pretty cool hum?
OK, Let's go to your question: Can u deliver Dynamic IPs? Yes
There is a service(package) called DHCPD, that is responsible for assign IP to clients configured to dynamic IP.
Depending on your distro, it can be very easy to install it.
REDHAT alike(rpm packages): "yum install dhcpd"
DEBIAN alike(apt packages): "apt-get install dhcp3-server"
After you install the package, go and edit the file "/etc/dhcpd.conf"(redhat) or "/etc/dhcp3/dhcpd.conf(debian)" to suit your needs.
Hope it helps you.