dewd, if you're using swordfish1's second option, a four port router is for you. I prefer the first option: having the router, a linux firewall behind it, and then my network (at this point two people with two desktops and a notebook) hanging off the switch.
The other option of using the dedicated machine as a firewall, is I'm also running a squid proxy on it, which speeds things up significantly.
At this point my router is in dumb modem mode, the firewall PC is managing the connection. I intend to change this so that the modem handles the connection (providing an extra layer of firewall), then my Linux box (which provides a number of other services too - I have all my old hard discs in it for extra storage, proxy, smtp relay, and I'm planning to make it a game server at some point too.