hypermicro is selling some very nice dual-processor 1U IBM servers for around two hundred bucks; both are xSeries eserver systems. I got the eserver 325 with dual Opteron 246s and 1GB for $189, and added two 512MB ECC DDR333 DIMMs for a total shipped cost around $230. The system now has a 120GB disk (included) and 2GB of DDR333 with Chipkill ECC. There is also an onboard Ultra320 SCSI controller even though this is an IDE model, it is unused. Rails are included for the second drive bay. The optical drive is a notebook CDROM but it is cabled using full size cables and an adapter board, so it should be trivial to switch. Finally, the system has two 100MHz 64-bit PCI-X slots; I actually had a dual-channel SCSI RAID controller lying around with a whopping 32MB of SDRAM on it, so I threw it in there. Quad USB, AMD chipset, Dual Linux-supported Broadcom GigE ports on the back along with a DB9 serial and a VGA port.
You can also get a Dual Xeon which is very similar; it's 2.8 GHz, has 2GB RAM, and has no VGA port. You need a C2T breakout cable (~$20-50 on ebay) or to add a PCI VGA card (supposedly) in order to get a console; C2T does include PS/2 keyboard and mouse connectors, however. This system is however $250 and is not advertised as including a hard disk. Because the types are not advertised I don't know if it's a SCSI model or not. The Xeon probably has slightly more raw processing power. The Opteron certainly has superior memory bandwidth (especially with four DIMMs.)
I am currently installing Ubuntu Hardy 8.04.1 Server for AMD64 on my system, and intend to provide report of how the install proceeded. I am using a Logitech Netplay USB keyboard and also have plugged in a Logitech Optical Wheel mouse. (I am amassing quite the collection of brand-name space heaters once again, what with my HP/Compaq "mobile workstation", ye olde IBM Thinkpad A21p, and Cisco Catalyst 3548XL. Nothing like the days when I had a stack of Apollos, some RT PCs and an Indigo, though... thank goodness.
Anyway, obviously I haven't completed an install yet, but so far there have been no snags whatsoever. None. I expect to have problems with lm-sensors, but who knows, it might be possible to get lucky. IBM offers some Linux-related downloads for this system, which not only was once the basis of a Linux-base cluster near the top of the Top500 running SuSe 8.
They originally started at $2,919, mind you that's one Opteron 240 and, IIRC, 512MB RAM and no disk (IDE cable is present, SCSI controller is present but no backplane.) Now yours for a much, much lower price.
The full fan speed would be fearsome, but I never expect to hear it except when cold-booting.