I'm somewhat new to server hardware, and was wondering if there was any reason to purchase a 19-inch-rack-mountable server as opposed to a standalone (tower) system, or any difference between the two other than form factor.
We're running a small operation, so we will probably never have enough equipment to justify a full rack.
Form factor is the main difference, and it doesn't take too many servers (5 or 6) before you really want rackmounted gear. You can get telco 'relay' racks for ~$100 or so, and if you've got rackmounted servers then all 6 or 10 of them (depending on height) will fit in one rack, taking up about 3sqft of space... whereas if you try and put 6 full towers in a room, you're going to need a lot more space than that.
Other than space, no, there's no good reason to do so - in fact, rack servers can be a poor fit for an office environment because without a rack to put them in they're kind of awkwardly shaped, and their cooling fans aren't aimed toward low noise at ALL so can best be described as 'jet engine-like' upon startup.
If you don't anticipate a rack in your near future, rack mountable servers will just be a waste of money. They're designed with a rack environment in mind (form factor, obviously, but also the cooling and port/button/drive access) and cost more than an equivalent tower server.
Tower servers are generally easier to place and physically work on outside of a rack. The hardware in similarly specced servers will be equivalent, though it can sometimes be harder to find really high-end stuff in a tower form factor. If your operation doesn't need a rack, they probably don't need those super higher-end features.
Why not look at a HP ML-series server, they come as towers but are easily converted to be rack-mounted cheaply if required. In particular the new ML350/370 G6's (1/2 Nehalem Xeons, upto 144GB mem, 24 disks) are nice-enough machines for the money (http://h10010.www1.hp.com/wwpc/us/en/en/WF04a/15351-15351-241434-241646-241477.html)
When Sun had pretty logos on the top of their 1U servers, a coworker was seriously considering buying one and mounting it on the wall ("bottom" of server mounted flat on wall, rotated so it looked like a diamond) as a home server / art installation. In the end he didn't do it because of the fan noise. Would have looked cool though =).
No-one's really mentioned the big reason you go with rack-mountable servers: the hot-plug, diagnostic and all-round keep-it-working-24x7 of them. For example, a network card failed in one of our HP Proliants recently, I pulled it out of the tower on its rails, looked at the little diagnostic lights, open the top, pulled the card out and pushed a new one in. If it wasn't for my colleague shutting it down when he noticed the problem, it would have started working as if nothing untoward had happened.
Tower system are not built like that, you will often have to shut them down, manhandle them onto a bench (or get on your knees) open the case, remove cards with a screwdriver and generally work on them as if you're rebuilding them.
If you don't mind downtime, then the tower is a good, quieter, cheaper (significantly) option. If you need continuous uptime, then buy the rack server and put it somewhere away from everyone else. If you have to put the server in your office, DO NOT buy the rack-mount one as your ears will not thank you.
Anything with rack ears on it is usually significantly more expensive than it would be otherwise. If you're planning on adding a rack, then go for it. If not - then you'd really just be throwing money away.
Rack mounted hardware is not optimized for noise reduction. You will have to store it in a server room.
It depends on whether or not you are looking to expand or not. If you are looking to purchase more servers in the near future, it's always blades > rack mounts > tower