I will add to what was said above. Do not under any circumstances upgrade.
I recently setup a clean Lion server, pre-installed on an iMac, with the lion server add-on from the App Store. So, totally clean machine, starting from scratch, Lion pre-installed.
It's been a nightmare. The Server tool is unusable. It is buggy as ****. User and Group assignments just up and dissapear. They are still present, but you can't see them from the Server Tool. The only way to manage them is to use the Users and Groups Preference Pane, which is a pain also, but at least it works.
The UI for setting permissions (yes, the standard Command-I interface), is screwed up also. It cannot handle simple tasks whithout failing. You never know what it its going to do. You add a group. But it doesn't take. You add it again. It might work. Hevean forbid you want to add a group, assign it read-write, and then apply to all subfolders. LOOKS like it works, but it doesn't. I confirmed this using the command line tools.
I finally gave up trying to use the UI for permissions, and now I am doing everything from the command line using "chmod" commands. These always work. As soon as I can figure out how to manage users and groups from the command line, that's what I'm going to do.
Windows SMB/CIFS sharing is a nightmare. It mostly works. Except when it doesn't. And it doesn't a whole lot of time. You think it's fine. But for no apparent reason, the Mac starts dropping the connection if it idles for too long. You can have a document open on a Windows machine, and go back to save it or work further, and the connection has dropped. Repeatedly you will work on a file, and for no apparent reason, when you try to save it, you are told that the file is already open by another user. But it's not. You are the only user, and in fact you are only using one single application to edit the file.
I could not get our Debian-Linux based RIPs (for our large format printers) to connect using SMB at all. I finally gave up after numerous attempts trying every possible combination, and switched to using NFS exports. Thankfully, NFS still works in Lion, and the NFS Manager app (google for it) has been updated to manage them if you are uncomfortable doing it from the command line / text editor.
We are hobbling along. It ain't pretty. I wish we had another option at this point.
FYI: We didn't have a choice but to make this move now. Our old fileserver, a linux box, could no longer keep up with our growing user base and our very large file systems (we are a medium-sized printing company). Linux is great as a Mac server for smaller networks, but it can't handle either Samba or AFP connections once the filesystem grows too large. It bogs down horribly due to the inherent limitations of Samba and Netatalk. So our only options were a Mac Server or Windows+Extreme-Z IP. We chose to roll the dice on an iMac + Promise Pegasus disk array on Thunderbolt + Lion Server.
I wish I had the option to install Snow Leopard. But you can't install it on this iMac. The only machines that support Thunderbolt AND Snow Leopard are laptops. Unless we spent gobs of money on a Mac Pro + Fiber Channel (which would have been almost triple the price), our only choices were the new Mac Mini Server, or the new iMac, either of which supports Thunderbolt, but neither of which supports Snow Leopard.
