Macworld has a nice article up in case you are looking for something to do with one of your old Macs. I, personally, tend to cash in on the ebay sucker factor quickly and over charge for my old Macs as much as I possibly can. However, I might consider this old Mac as a jukebox solution next time I upgrade (although, I've been pretty pleased with the 200GB Hard Drive I have connected to my NSLU2 for streaming music to my Mac and then routing through my entertainment system via Airtunes).
It's really a very basic how-to that all hinges on iTunes. Considering how scriptable iTunes is, with a little effort you could really trick this out. Nevertheless, having an entire Mac devoted to music serving seems a bit like overkill I think if I were to do this, I'd get a Mac mini as an entertainment center computer and have it do some video stuff as well.