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It is going to require you to setup terminal services and purchase the licenses. In addition and perhaps most importantly the load of running Office for each user on the same server will likely put a substantial load on the server. It depends on how much time your yousers spend using Office apps and what kinds of things they do. This may require additional server capacity. I believe MS suggests as a rle of thumb 1 server per 25 Terminal Services Clients. It depends on many factors but using TS can be a great way to avoid upgrading client machines. For example buy new computers at $1500x25 computers=$37,500 or 1 new terminal server with 2 proccessors and a 75GB raid $7500-$10,000.

First, Answer 1 assumes you are using Windows 2000 Server (which has Terminal Services built in), or Windows NT4 Terminal Server Edition.

In addition to the costs mentioned in Answer 1, you also need to worry about licensing issues.

To implement the mentioned solution you need:
Sufficient Server Client Access Licenses (1 per connected client computer)
Sufficient Terminal Server Client Access Licenses (1 per client connecting through Terminal Services)
Sufficient MS Office licenses (1 per concurrent connection to Office)

You don't need terminal services to run Office from a server.

The main disadvantages are:

1. More stress on the resources of the file server (RAM and Disk I/O)

2. More traffic on the network infrastructure.

The advantages of running Office from a file server (administrative install) are:

1. You have a central point of administration where updates and patches can be applied.

2. The disk footprint on the workstations is greatly reduced. I believe about 25 to 35 megabytes instead of 400.

3. Less, and faster patching at the workstation level.

4. Faster reinstalls in case of crashes.

why not try out the SME servers out there

www.e-smith.org they can be downloaded for 0 cost
they can support from 0 - 200 + users Hardware low cost graphical interface to manage the box. Easy of use.