Does Xeon Good For gaming + hosting multiple servers?

How fast is your internet connection?

Xeons are designed for Workstation tasks and server task, so a good Xeon should be good, but a cheap one (like Xeon E1230) are basically I7, and it is not designed to do that.
ohh, and the question above. a fiber net with 100Mb theoritical throughput (advertised as 100Mb Fiber Broadband) will not be really up fo this task probably, for these you will need a business connection, not a commercial

Edit: please make it more clear:

You want a PC at home where you can host multiple servers AND game in one of the servers AND you want it for cheap (less than £200 for CPU)?

Why do you need to upgrade? What isn't working well or what can't you do? If you can answer that question well, then we can help you really hone in on what will give you the most benefit as far as upgrades go.

#1 question : does Xeon Good for multitasking like Gaming+ hosting multiple game servers?

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Yes and no. There are a bunch of different Xeons out there on four different sockets but really only two are very interesting to most of us.

1. Xeon E3-12xx v3 in Socket 1150. These are essentially the same Core i5 and i7 4xxx series units you have but with HyperThreading and the full 8 MB of L3 cache usually left enabled, compared to such things only being enabled on the i7-4770 models. The E3 Xeons also support unbuffered ECC memory which is pretty unimportant unless you are running a server or workstation that needs to have very high leave-it-running-for-months kinds of reliability. The E3 Xeons will perform pretty similarly to the corresponding Core i5/i7 units except HyperThreading might give it a small boost over the non-HyperThreading-enabled i5s.

2. Xeon E5-26xx v2 in LGA2011. These are a series of 4, 6, 8, 10, and 12 core CPUs that can be used in two-CPU arrangements. The four- and six-core units are slower and much more expensive than the corresponding LGA2011 i7s but can be used in dual-CPU motherboards. The really interesting ones are the couple-thousand-dollar higher-clocked 8, 10, and 12-core units. Two of these would do decent at gaming (not much better than your i3) but be extremely potent in multitasking. However you will likely spend five to six grand on a machine with these CPUs.

The other Xeons are generally not very relevant to enthusiasts.

#2 : what's the cheapest Xeon Processors ?

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None of them, really. Intel charges a premium for features that are not found in regular consumer Core series chips. ECC memory support demands a small premium (Xeon E3), increased memory capacity due to registered memory support costs quite a bit more (E5-14xx/16xx series), dual CPU support costs a bunch (Xeon E5-24xx and E5-26xx), >2 CPU support in the E5-46xx and E7s costs an absolute fortune, and more than 6 cores costs a fortune as well.

#3 : Why Xeon Not Fx8530 or I7 extreme?

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Intel Extreme Editions are never a good deal. This is especially true since the i7-4930k is the same chip as the i7-4960X with the same unlocked multiplier but clocked a tiny bit slower, and for half the price.

As for why not an FX-8350, the only thing I can think of is that you already have an Intel LGA1155 or 1150 motherboard and would have to buy an AM3+ motherboard to use it. Otherwise the FX-8350 is a very fast and affordable chip.

#4 Do i need new motherboard for Xeon?

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You can probably run an E3 Xeon in your board as they use the same sockets as the Core i-series. Just make sure to get one that uses your same socket (either 1155 or 1150.) The others use different sockets and won't fit in your board.