I personally think that the atom is way to expensive, I would go for the Sempron http://www.newegg.com/Product/Product.aspx?Item=N82E168.... Its a dual core and its $34. What could be cheaper? Especailly when you can actually choose your own heatsink and you can change out the cpu if you need to. Where the atom is permanently placed on the motherboard, which is always a mini-atx. Which is a horrible form factor.
I believe a dual-core Atom and motherboard is about $80 these days? That's one of the cheapest combos available.
The big limitation as a server is that the Intel chipsets on the Atom motherboards typically only support two SATA hard drives. You can get more with an Ion board, but that pushes the cost up into three figures.