I've got a Windows Server 2008 set up, and I'd like to use it for Web Hosting. What I need to decide now, is which web server to use, or the inbuilt, IIS.

I used to use IIS with WinCache, but there is a certain lag on initial load of scripts.

The scripts will be mainly PHP, with MySQL db access, so those "modules" are a must. Caching modules are a plus.

What do you suggest?

IIS7 is very nice. I'm still impressed how well MS did with it, even two years later.
What you knew about (and hated about) IIS6 doesn't really apply anymore.

I agree. IIS 7 is the only choice for Windows 2008.
There's no point of running Apache or some other web server on Windows 2008 server.

I'd second IIS setup on Windows 2008 as it has been fantastic. You will need to ensure that you are using PHP w/ FastCGI and it provides excellent performance of PHP applications.

IIS 7.5 is the way to go.

The choice is IIS, if you do not need IIS, no point installing Windows 2008, Linux Apache may do a better job.

I suggest to use IIS + PHP (running as fast-cgi) + wincache.
It's arguably faster than linux + apache + php + eaccelerator.

Another big vote for IIS7, PHP and WinCache.

Install it using the Web Platform Installer: http://www.microsoft.com/web/downloads/platform.aspx

Literally takes just a couple clicks then less than a minute or two and you're done. You may only need minor tweaks to php.ini for your specific needs.