The first one or the second one?
A T1? Wow!
You could run a decent server off of broadband, w/o those dial-up freaks

With the max CPU and a good deal of RAM, you can probably run some older generation games, Q3, MOHAA, RTCW, stuff like that. I would think w/ the popularity of the newer games and the like, you might tax the system too much on that hardware.
I used to run MOHAA on a dual PIII/933 w/ 512MB and Matrox G450 DualHead. I had about 5 dudes on w/ Cable/DSL connections and it worked pretty good. I have DSL as well.
I don't think you're speed is a bottleneck, but the hardware I would say is.