As rvnguy has mentioned, if you set it up like that then you will be reliant on the server for your internet connection which you may want to avoid.
What I would reccommend is using a router and a switch, so that each machine is independent of eachother with regards to internet access, but files can still be shared etc.
You would need an external DSL modem for that though, as it would be DSL Modem > Router > Switch (although you could get a router with a built in swtich) > PC's
I have ADSL, and my device is a Modem/Router with built in switch so I can do all the above from one box and have two machines running off it and I used to have another machine that I used for storage - so I had it running exactly the same as you want to do.
'When all else fails.......read the manual'