i'm going to go ahead and say, no, the i7-960 is probably a little over-kill in your case, usually when people want to set up servers for cpu intensive work, the person usually knows a great deal about computers, considering you are asking this question, id take a wild guess that you are probably not going to do a lot of server-intensive tasks on this machine and a better choice would be a more power-saving cpu (since you'll have it running 24/7 like most servers) such as the i3/athlon II
Can a i7-960 be used as a server CPU? What would be the pros/cons?
The i7 960 can be used as a server CPU. The only differences between it and an LGA1366 Xeon 3500-series CPU are that the Xeon supports ECC memory (the i7 does not) and the Xeon costs more. I'd probably want ECC in a server for added stability/uptime, but if you aren't installing much RAM and don't need a bunch of nines in uptime, you can probably get away with the i7.