Fedora Core 2 is due for mainstream release in a few weeks it's at Test 2 at the moment, May 10th is the release date iirc, this features the 2.6 kernel and many new features including SELinux, although these will open a new era of problems.
I can't wait for Core 2, non-hosting use though (initially)
I personally went with SuSe for just under £50 from amazon.co.uk for personal usage. But, I found it to be very bad with regards to upgrades etc. So I am looking at either Mandrake or Fedora for personal. The main point to both new releases is that they run on the 2.6.3 kernel rather than 2.4 kernel.
I would suggest going with either Fedora or Debian for LINUX. Probably the latter better for servers.
I have Fedora Core Test 2 - 2.6.4 Kernel running 4 game servers (at the maximal capacity, load average 2.XX range (I know don't shout please). However none of the servers lag whatsoever. I think you can test it, however I switched my business to Windows 2003 (2.4+ ghz CPU - 1 GB ram for single CPU and 2.4ghz - 2 GB ram for dual CPU) , I have 10 HLDS servers running on a 3.06 Ghz - 1 GB Ram without any lag whatsoever, there is choke as expected in windows due to winsock's faults (as i've heard). But win 2003 can handle 10 servers without any issues whatsoever related to performance. I am going to teste 15 servers on a box tonight, not all are customers, putting all of the customers to "real-time" proccess priority, I will reply back and tell you how it goes, because I may have just found a solution to most performanc problems.
I have heard good things about FreeBSD (newer kernels) but I wont bother trying as I am doing MCP - (IRC HLDS server control panel) development on windows. Its more efficient that way.