Windows 2003 Print server vs Jetdirect print server ?

Hi,
I have setup a print server queue for about 150 users on our Win 2003 R2 server.
I was wondering what are the advantages of using the server instead of using JetDirect or other hardware solution. I know that security is one advantage.

I though that by setting a print server in Windows 2003, my user’s print jobs would be spooling on the server and not on their C: drive.
Right now, what is happening is that if the printer has run out of paper or there is a paper jam and my user print to the network printer, they get an error message.

Am I configuring my print server correctly ?

Any pointer would be greatly appreciated