Yep most small places do start out using a normal desktop computer as their Server.

But Windows 9x (95,98,ME) Can not join a Windows Domain so you would need to have all 2000,XP,Vista machines. A Windows 95 machine can access resources on the Domain but it can not join like a Window NT class system can.

A starting price though to get into the Windows Server realm is about $1,000 US Dollars

http://www.microsoft.com/windowsserver2003/howtobuy/licensing/pricing.mspx

But you should have someone on board with a pretty good knowledge of Windows networking otherwise it could be a bit rough.