I'm trying to setup a T1 network in an office environment. Initially I'll have two workstations plus a printer, but I want to be able to expand to 10 workstations and up to 3 printers. What equipment to I need?

You will need a router, Switch and NIC and a server.

I've been researching routers and switches and need more direction on what will meet my needs. Ethernet NICs are a given. Why is a server needed?

"Why is a server needed?" It is not. If you want to share a printer, however, I would recommend a print server. This is a small (usually) device into which a printer connects. Sometimes the print server is actually inside the printer (you might be familiar with HP models like this). Cheaper print servers usually allow a max of three printers connected (so just right). But you can always have one computer on the LAN share its printer and achieve the same function. What you need is a router to bridge the gap between your LAN and the Internet-at-large. This segmenting device has to be able to send/receive packets and communicate with other packet-routing devices. So you want a router. Aside from that, a switch is some sort of box that you plug computers into to network them. Most routers have several ports in them that are in fact switches (built-in). Regardless, a switch simply refreshes the electrical signal and connects all computers connected to it physically. For small-scale networks (like yours - just a dozen or so computers), you can try various vendors. Netgear, Linksys, HawkingTech, D-Link, and maybe a few others are marketed right at you and (hopefully) your budget. A router can be from $50-$150, a printer server from $80-$150, and a switch nearly any price. With this information, use Google and search a few vendor websites for information about their products.

Why a server? For a number of reasons. Centalized backup of files and programs. Better security and control over data. Can provide print services. So you can put a backup unit in the 10 wksts or a single one in a server and have everyone store their data on the server. Which do you think would be easier to maintain and would cost less in the end run? You don't say what you are going to be doing with your network or what you need the T1 for. Since you don't mention connecting to a remote site I will assume you will use it for internet access. I would recommend a wireless netgear cable/dsl router. Add to this a 12 port 10/100 switch. Connect your cable/dsl connection to the router. Use a crossover cable from the switch ports on the router [comes with 4] to the switch. Connect all pcs to the switch. Enable the dhcp server on the router [comes with easy instructions] and set all the clients to dhcp for ip addresses. Walla you have your physical network. I recommend the wireless because there is always a laptop out there wanting to get connected and the wireless routers are cheap. After the physical you have to think about the logical. Are you doing peer to peer or client server. Each has its own configuration.