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Would it be silly for me to upgrade my current
server (W2k3) to a W2k8 server if all I do on
that computer is file share and backups? I am
currently using the 180 day trial of W2k8
server and it's nice but probably overkill. I have
Win7Pro on order and think that would server
my needs just as well if not better than W2k3.

"I am currently using the 180 day trial of W2k8 server and it's nice but probably overkill."
That's your answer right there!
The purpose of trial licenses is subtle conversion. Although, you didn't state how long you've been running the Server 2008 demo, my suggestion is to run it till it expires. If by then you still aren't convinced or compelled to make the switch, just stick with your Server 2003, especially since you aren't fully utilizing Server 2003 anyway.

I would get windows 7, because it is more recent, and has updated networking features. Windows will probably come out with a new server os in a couple of years, and if you would like to save a little money, I would use windows 7 because it is newer. (If that helps at all)

File share and backups? Why are you paying for any Windows OS? There are a ton of better options ranging from using a Linux distro to buying a dedicated NAS. For the cost of Server 2008, you could buy a NAS device with RAID and everything and use that for file sharing. If you want more control, pretty much any Linux distribution can do that.
If you use a non-server version of Windows, be warned that you may run into connection limitations. For example, XP Pro limited the maximum number of users connecting to a share simultaneously to 10 (if I remember right).
-Ryan Adams
Free Computer Tips and more:http://RyanTAdams.com
Paid Tech Support: Black Diamond

"if all I do on that computer is file share and backups"
Not silly. Give me the few hundred dollars and I will give you a Linux OS that will do the same tasks. (almost all linux is free by the way)
Playing to the angels
Les Paul (1915-2009)

I own and prefer windows oss for a reason. Free isn't free if I'm
pissing away my time re-inventing the wheel.
Samba can suckit.
I will pay for ease of use.

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