>>Absolutely with SQL Server on the same box. I originally recommended the fastest processor and most RAM you can afford...I guess that's my rule of thumb. I also prefer to not run IIS, SQL Server, and biz objects on the different boxes.
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>What's the advantage of running business objects on a different machine than IIS? Seems it would only incur the unnecessary overhead of DCOM...

It would really depend on the bandwidth needed to talk between object layers, and the frequency that layers talk between each other. If the bizobjs hit SQL Server a lot relative to the instances that they were called (eg transaction processing where UI submits a page to a bizobj for validation of lots of fields, bizobj then smacks things in SQL Server a lot to detect errors, and little comes back to the UI from SQL Server), then placing them on the SQL Server box would minimize the bandwidth required and remote COM references generated.