a while back, when i first needed to set up iptables, i did alot of reading about it, and was gonna write a script but it was just way too complicated so i just found a script on the net and edited it a bit. this is what i use.
everything works behind this, aim, diablo II, file sharing, irc, ftp, etc.
#!/bin/sh
# rc.firewall - Initial SIMPLE IP Firewall script for Linux 2.4.x and iptables
###########################################################################
# 1. Configuration options.
# 1.1 Internet Configuration.
INET_IP="1.2.3.4" #your "real" ip
INET_IFACE="eth0"
# 1.2 Local Area Network configuration.
# your LAN's IP range and localhost IP. /24 means to only use the first 24
# bits of the 32 bit IP adress. the same as netmask 255.255.255.0
LAN_IP="192.168.0.1"
LAN_IP_RANGE="192.168.0.0/16"
LAN_BCAST_ADRESS="192.168.255.255"
LAN_IFACE="eth1"
# 1.4 Localhost Configuration.
LO_IFACE="lo"
LO_IP="127.0.0.1"
# 1.5 IPTables Configuration.
IPTABLES="/sbin/iptables"
###########################################################################
# 2. Module loading.
# Needed to initially load modules
/sbin/depmod -a
# 2.1 Required modules
/sbin/modprobe ip_tables
/sbin/modprobe ip_conntrack
/sbin/modprobe iptable_filter
/sbin/modprobe iptable_mangle
/sbin/modprobe iptable_nat
/sbin/modprobe ipt_LOG
/sbin/modprobe ipt_limit
/sbin/modprobe ipt_state
# 2.2 Non-Required modules
/sbin/modprobe ip_conntrack_ftp
/sbin/modprobe ip_conntrack_irc
###########################################################################
# 3. /proc set up.
# 3.1 Required proc configuration
echo "1" > /proc/sys/net/ipv4/ip_forward
# 3.2 Non-Required proc configuration
#echo "1" > /proc/sys/net/ipv4/conf/all/rp_filter
#echo "1" > /proc/sys/net/ipv4/conf/all/proxy_arp
#echo "1" > /proc/sys/net/ipv4/ip_dynaddr
###########################################################################
# 4. rules set up.
######
# 4.1 Filter table
# 4.1.1 Set policies
$IPTABLES -P INPUT DROP
$IPTABLES -P OUTPUT DROP
$IPTABLES -P FORWARD DROP
# 4.1.2 Create userspecified chains
# Create chain for bad tcp packets
$IPTABLES -N bad_tcp_packets
# Create separate chains for ICMP, TCP and UDP to traverse
$IPTABLES -N allowed
$IPTABLES -N icmp_packets
$IPTABLES -N tcp_packets
$IPTABLES -N udpincoming_packets
# 4.1.3 Create content in userspecified chains
# bad_tcp_packets chain
#$IPTABLES -A bad_tcp_packets -p tcp ! --syn -m state --state NEW -j LOG \
#--log-prefix "New not syn:"
$IPTABLES -A bad_tcp_packets -p tcp ! --syn -m state --state NEW -j DROP
# allowed chain
$IPTABLES -A allowed -p TCP --syn -j ACCEPT
$IPTABLES -A allowed -p TCP -m state --state ESTABLISHED,RELATED -j ACCEPT
$IPTABLES -A allowed -p TCP -j DROP
# ICMP rules
# Changed rules totally
$IPTABLES -A icmp_packets -p ICMP -s 0/0 --icmp-type 8 -j ACCEPT
$IPTABLES -A icmp_packets -p ICMP -s 0/0 --icmp-type 11 -j ACCEPT
# TCP rules
$IPTABLES -A tcp_packets -p TCP -s 192.168.0.0/24 --dport 21 -j allowed
$IPTABLES -A tcp_packets -p TCP -s 0/0 --dport 22 -j allowed
$IPTABLES -A tcp_packets -p TCP -s 0/0 --dport 80 -j allowed
# UDP ports
$IPTABLES -A udpincoming_packets -p UDP -s 0/0 --source-port 2074 -j ACCEPT
$IPTABLES -A udpincoming_packets -p UDP -s 0/0 --source-port 4000 -j ACCEPT
# 4.1.4 INPUT chain
# Bad TCP packets we don't want.
$IPTABLES -A INPUT -p tcp -j bad_tcp_packets
# Rules for incoming packets from the internet.
$IPTABLES -A INPUT -p ICMP -i $INET_IFACE -j icmp_packets
$IPTABLES -A INPUT -p TCP -i $INET_IFACE -j tcp_packets
$IPTABLES -A INPUT -p UDP -i $INET_IFACE -j udpincoming_packets
# Rules for special networks not part of the Internet
$IPTABLES -A INPUT -p ALL -i $LAN_IFACE -d $LAN_BCAST_ADRESS -j ACCEPT
$IPTABLES -A INPUT -p ALL -i $LO_IFACE -s $LO_IP -j ACCEPT
$IPTABLES -A INPUT -p ALL -i $LO_IFACE -s $LAN_IP -j ACCEPT
$IPTABLES -A INPUT -p ALL -i $LO_IFACE -s $INET_IP -j ACCEPT
$IPTABLES -A INPUT -p ALL -i $LAN_IFACE -s $LAN_IP_RANGE -j ACCEPT
$IPTABLES -A INPUT -p ALL -d $INET_IP -m state --state ESTABLISHED,RELATED \
-j ACCEPT
# Log weird packets that don't match the above.
$IPTABLES -A INPUT -m limit --limit 3/minute --limit-burst 3 -j LOG \
--log-level DEBUG --log-prefix "IPT INPUT packet died: "
# 4.1.5 FORWARD chain
# Bad TCP packets we don't want
$IPTABLES -A FORWARD -p tcp -j bad_tcp_packets
# Accept the packets we actually want to forward
$IPTABLES -A FORWARD -i $LAN_IFACE -j ACCEPT
$IPTABLES -A FORWARD -m state --state ESTABLISHED,RELATED -j ACCEPT
# Log weird packets that don't match the above.
$IPTABLES -A FORWARD -m limit --limit 3/minute --limit-burst 3 -j LOG \
--log-level DEBUG --log-prefix "IPT FORWARD packet died: "
# 4.1.6 OUTPUT chain
# Bad TCP packets we don't want.
$IPTABLES -A OUTPUT -p tcp -j bad_tcp_packets
# Special OUTPUT rules to decide which IP's to allow.
$IPTABLES -A OUTPUT -p ALL -s $LO_IP -j ACCEPT
$IPTABLES -A OUTPUT -p ALL -s $LAN_IP -j ACCEPT
$IPTABLES -A OUTPUT -p ALL -s $INET_IP -j ACCEPT
# Log weird packets that don't match the above.
$IPTABLES -A OUTPUT -m limit --limit 3/minute --limit-burst 3 -j LOG \
--log-level DEBUG --log-prefix "IPT OUTPUT packet died: "
# Enable simple IP Forwarding and Network Address Translation
$IPTABLES -t nat -A POSTROUTING -o $INET_IFACE -j SNAT --to-source $INET_IP