From Apple:
Requirements - Xserve, Power Mac G5, G4 or G3, iMac, eMac or Mac mini computer; 128MB of RAM, at least 256MB of RAM for high-demand servers running multiple services; built-in USB; 4GB of available disk space.
What kind of services are you planning to run on your G3? A regular install of OS X can do a lot (like hosting and serving up websites for example) so an expensive OS X server license may not be necessary.