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I'd suggest Redhat Enterprise linux 4 or the free version of that is CentOS (which I use). Depending on the number of users and how active they are you might also consider adding at least another 512Mb to your configuration.
I'd second the suggestion for CentOS 4. Fedora is great, but only if you don't mind going offline every 6-12 months to upgrade. CentOS, like RHEL, has at least a 5 year maintenance cycle.