Well it all depends on what you want to do. You could use a regular computer as a server. Linux Server Talk's server is just a basic white box computer. It uses a Intel desktop motherboard, P4 processor, non Ecc ram, regular Sata 150 hard drives, all of that is mounted in a regular ATX case. There is not one true server part and it works just fine.
I would say its a high end budget server, total cost was $1,000. Dell makes a really nice server the
Power Edge SC430. Starting a $449, my old server was a Dell Power Edge SC600.
I don't know if you know this or not but Comcast offers a higher speed cable modem for $10 more per month. Its 8mbps down and 768kb/s up. If your not running that package already it will double your upload bandwidth. You might be able to get away with running on your cable modem a bit longer if you up your bandwidth. I don't know if you have it installed already or not but you could install MRTG and you would know right where you were at with your bandwidth.
There is no difference between a 1u and a midsize tower other than the size of the servers. A 1u server tends to run hotter than a mid size tower and doesn't last as long. Depending on how hot your 1u server runs your looking at a 1 to 3 years of of use before something major breaks down.
When you choose your data center you will need to ship your server UPS. Unless your going to drive it there. And unless your co-location provider offers kvm over ip, your going to have to pay their tech to look at your server. If anything ever goes wrong with it.
Racks are just a way to store the server, all servers are mounted on a rack. It doesn't matter 1u or midsize tower. I hope I answered all of your questions, if you think of anything else just let me know.
