Can I do it this way?

I am looking at replacing our current network with all new machines. It consists of 1 Server and 6 clients (5 logged in at a time)
In regards to the Server. It is currently an HP Netserver E50. All it does is control the network domain access (Microsoft BackOffice SBS Server v4.0), 2 print servers and backup the shared drive.
My question is do I have to use a machine that is specifically labeled “Server”. Or can I use a desktop CPU with 512MB Ram, 80GB HD and a 2.4Ghz processor? (Current system has 160MB Ram, 8GB HD, and 333Mhz Processor)