I agree that switches would be the best option for this network, just for bandwidth's sake. It doesn't have to be as much as you might expect. I'd recommend picking up seven 24-port switches (Zeus Micro $195@Accessmicro.com) and a Linksys gigabit starter kit (8 10/100 ports, 1 gigabit port and a gigabit NIC) for about $220. Totals to about $1600, or $10/port for a fully-switched 100Mb/s network with a gigabit server port and NIC. Quite a steal! If you wanted to spend a BIT more cash you could pick up a more name-brand 24-port switch (IE, SMC) for about $250 each.
If you REALLY need to be cheap, you could pick up some used 24-port 10BaseT hubs for about $80 each plus an 16-port 10/100 switch for about $150. That'd get you into it for under $750, but your performance would be about 1/4th the other solution.
All that being said.. Most gaming is optimized to run across the Internet. 128K seems to be a good spot for adequate bandwidth for most games. Even 24 people sharing a 10Mb/s hub is only about 3Mb/s (Of course, with a half duplex hub, your max bandwidth is about 5Mb/s). You'd probably survive for this (and likely) next generation games. From there, however... Who knows. To do it right, ante up the $1600 and get the switches!
Most poor gaming performance is caused by latency within the network - Delays, bottlenecks, etc. On a LAN (even 10Mb/s), this should be pretty unusual. You'd probably play pretty much anything fine. Just don't do any major transfers to/from the server at the same time!
Lastly.. Don't forget to factor in the cost of cables! They add up rapidly. You can find 7' cables for about $2 and 15' for $3 if you look carefully, however. If you need 160 15' cables, however, you're adding another $500 to the price!
- G