Depending on what OS the server is running, it is recommended that you use your ISPs DNS servers. However, if you have say a W2K3 machine with the DNS service installed or even *nix with BIND for that matter, you can set up the DNS server so that it will forward requests to your ISPs DNS servers or you can not use forwarding and make the server resort to root hints. This simply means that the server should be pointed to itself and clients pointed to the server for DNS queries, that is if the service is installed and configured. Usually the router is setup to be a DHCP server, so it will hand out IP, DNS, and gateway information to your client machines.
Here is a list of the IP ranges you can use for your LAN.
10.0.0.0 - 10.255.255.255
172.16.0.0 - 172.31.255.255
192.168.0.0 - 192.168.255.255
Each range consists of non-routable IP addresses. I use the 10.1.1.0 – 10.1.1.255 range for my network simply because I can remember all the IPs for my servers.
It’s best to assign the router with the first valid IP address within what range you choose, say an IP of 192.168.1.1 (most common), IPs 192.168.1.0 and 192.168.1.255 are invalid for use. This in turn leaves you with IPs 192.168.1.1 through 192.168.1.254 for use. For the server, I would recommend choosing the next IP address within that range to be 192.168.1.2. Remember, the subnet determines the network ID and host ID of the IP address. So if you had an IP of 192.168.1.1 w/ a subnet of 255.255.255.0 and another IP of 192.168.1.2 w/ a subnet of 255.255.255.0, these two IPs would have no problem communicating with each other since the network ID is the same (192.168.1). Each IP on a LAN must have the same network ID and unique host IDs, having the same network ID avoids the use of a router between 2 different subnets. We will not go into a complete understanding of network IDs, host IDs, and subnets but it’s good to know.
An example of improperly configured LAN IP address would be 192.168.1.1 w/ a subnet of 255.255.255.0 and an IP of 192.168.1.2 w/ a subnet of 255.255.0.0. These two IP addresses are not local to each other since they are on a different subnet and cannot communicate with each other. The network ID of the first IP address would be 192.168.1 with the last octet being the host ID and the second IP would have the network ID of 192.168 and the last two octets would be the host IDs. You really don’t have to worry about this since DHCP will be handing out IPs for the client machines but again, it’s good to know. I recommend you assign a static IP for the server or make DHCP reserve an IP for the server. This ensures that your client machines will not have any problems when going out to find the server since the IP is always the same.
I also recommend that you get rid of that hub and buy a switch. Hubs share bandwidth and traffic with each connected computer where as a switch dedicates bandwidth to each port and "switches" the packets to the correct receiving machine. Hubs can be essentially called “dumb” switches since they relay every packet on each port that could sometimes cause packet collision.