File Server: if you are running OS X 10.4 or later, you can use your older PowerMac as a household file server. I have a wonderful PowerMac G5 Quad acting as the central file server in my home today. It is solid, reliable and fun to play with as well.
Music Server: With an appropriately large disk installed, an older Mac can make a very competent jukebox, cranking out the tunes from any of a number of very good music applications (such as Musicmatch Jukebox, Audacity, MPEG Layer 3 Player, MPEGDec and Audion, to name just a few) including the early versions of iTunes. I have iTunes 1.1 installed on my PowerMac 7500 and despite the intervening years, iTunes runs very well. Also of historical interest is SoundJam MP, the program Apple purchased and turned into iTunes! All of the programs mentioned here (and more) are available at http://www.macintoshgarden.org
Write Documents: MS-Word and MS-PowerPoint work extremely well all the way back to the days of 68K Macs. They were remarkably full featured software packages back then and are still very functional today. I write an online journal these days using my 68K Macintosh Quadra 840AV and MS-Word 6.0 for Mac. In addition to MS-Office, a remarkable array of very competent document creation packages exist for older Macs, including AppleWorks (of course), Bean, AbiWord, WordPerfect, and so on.
Plan the Family Budget: Similar to the above, MS-Excel was a great spreadsheet all the way back to the days of 68K Macs and is still a great spreadsheet for the majority of us today.
Edit Photos: I have Photoshop 6.0 loaded on my G4 Cube and find that it offers an excellent and responsive photo editing experience. Photoshop 4.0, loaded on my 68K-based Quadra 840AV, is not quite so responsive, but still very usable. However, there are a very large number of wonderful image editing programs available for older Macs, many of which are much like “Photoshop Lite”. Anyone remember the wonderful old image editor BME? You will also be able to find it, early versions of GraphicConverter, Adobe’s PhotoDeluxe, the predecessor to Photoshop Elements and many, many more, also at http://www.macintoshgarden.org. Many of these extend all the way back to the days of 68K Macs, if you have the patience to wait for larger images to load.
Recover Those Old Files: If you used Macs “back in the day”, you probably have floppy disks and CDs with old files on them that you thought you would never see again. In my case, I had floppies from back in the mid-90s that for some unknown reason I had hung onto all these years. What a joy to be able to open them up again and recover all that wonderful data.
Play Games: There are stacks of wonderful older games available for PowerMacs in particular. http://www.macintoshgarden.org is a particularly rich source of these. Cruise on over and have a look.
Browse the Retro Web: There are a significant number of vintage web sites still available that your older Macintosh has more than enough oomph to visit. It is fun to remember what the web was like way back when. Have a look at http://www.404pagefound.com/ for plenty of links to vintage web sites that still work. While we are talking about retro, there is one last thing to be considered…
Indulge Nostalgia: Mac OS was SO far ahead of its time! While DOS was command line based and Windows was crash based, Mac OS was solid, refined and a joy to use. It still is! I still marvel at how seamlessly networking worked back in Mac OS 7.x, at the same time as Windows was making networking something akin to water torture. Give a whirl and enjoy how seamless and easy the experience is.