How do i setup my linux server to act as a internal ftp server. i have 30 machines who would want to log onto external ftp servers ( for hosting and stuff ). They would have to go through a ftp server on the network server to get outside to the internet?
What program on linux would i use
How would i set up a mail server on my linux box? would i use sendmail or smail?
There are several ftp daemons that are available to run a FTP server. I personally like proftpd. If its an internal server then you could bind the ip address of the ftp server to the internal ip address for your network.
You do not need to route ftp traffic through a local ftp server and then to a remote one. If your 30 machines have access to the Internet, then they could just go directly to the IP address or domain name address of the external ftp server. Of course, you should look at how they get out to the Internet from the local network. Is there firewalls, routers, etc.. that could possibly block the connection?
Setting up a mail server requires two different services. First you need MTA (Mail transfer agent) service to send/receive mail from the server. Sendmail is probally the most popular but others have proven to be very good also. Second, unless your users have shell accounts to check their email, you will need to setup IMAP/POP3 so that users could login using a Mail client, authenticate, and download their email.
A final bit of advice, if this is something that is new to you, then you should definetely take a look at some online docs or get a Linux administration manual. The ones published by OReilley provide excellent detail that is easy to understand.
ftpd- proftpd (i absolutely love this ftp server, as its built with security in mind, has chroot environments, and its configuration is modeled after apache's. there are so many directives....excellent choice for a decent server.
mta- sendmail is ok, but i prefer exim.
pop3/imap: i prefer to use imap, as it leaves the files on the server. pop3 though is ok if you have a lot of users/email/.
for imap, i use courier.
this is really just a preference sort of thing.....different strokes for different folks and all that. 
For my FTP daemon I use vsftpd. Not sure if it's the best but it works and I like it, I've also heard it's one of the fastest.
If you want to keep the FTP service internal, then get a router and don't forward the port you are using (probably 21). If you do this only the computers behind the router (your LAN) will be able to access this FTP server. You can use the LAN IP address of the server to access it.
But a more cost effective and secure way of having a local FTP server is to install a second NIC in to your systems and run everything through a switch using a non-routable IP format. That way global bandwidth utilization is not taken up and there is no traffic going out in the direction of the global Internet.
Just my 2 cents...
Yeah you are right that way would be cheaper because a switch is less expensive than a router.
It would also be more secure. You never know how secure routers are these days.
thanks.