Well in my lab we needed a simple database to keep up with all of our reagents, antibodies, plasmids, etc. I upped the ante and set up a web site running mysql/apache on a g3 imac with similar specs. It performs wonderfully, since it doesn't have to handle much traffic.
It depends on what features you need and how much traffic you intend to generate. You can find cheap hosting if you are just putting up a web page with a few pics and pages. If you want reliable php/mysql and some semblance of control and security, you will probably have to shell out a little more.
Also if you decide to use the g3 as a server, I wouldn't suggest using OSX because of the high overhead it involves. I'd use a minimal linux install that only runs the services that you need. However, this isn't for the unix novice.
Jim