Linux is fine on an old PIII, but remember if you haven't got much ram on the machine, don't expect to run the latest desktops with all the eyecandy etc.
Your best choices for distro would be the lightweight ones like Gentoo, Slackware or plain vanilla Debian.
I ran an email/antivirus/firewall/router server on an old PIII 800 laptop with just 128mb of Ram for a while. It chugged along and did it's thing without a reboot for about a year and a half before I replaced it.
