Linux for low cost telephone

I'm currently using a dialup account, but am going to upgrade, probably to cable internet. My primary pc is Windows 7. My only Linux experience was with a copy of Ubuntu that I set to dual boot with XP on a system about 3 years ago. Wasn't happy that it couldn't play most of my compressed videos (Nero Digital), and I couldn't figure out how to install VLC media player, so I gave up on it.

I've heard that there are some hardware based solutions that allow a person with a high speed internet connection to simply plug in their current telephone, and use the telephone as they are used to.

One of my ideas for going with cable internet is that I would like to eventually drop our landline, which costs about $29 a month with taxes & such. However, I would prefer not to have to mess with software, and I know my wife won't put up with any solutions that require her to use software, headsets, or anything like that.

In fact, I don't want to have my regular Windows 7 PC on all the time. I would much prefer to be able to have some tiny, energy efficient computer (netbook? some other type of mini pc?) on all the time, acting as the computer that is hooked directly to the cable internet. Other PC's in the house could be hooked up to the internet wirelessly, or something like that.

Can anyone suggest:

A) version of Linux that would work well for 100% ontime as a server

B) hardware platform that would work well for this - dependable
small, and energy efficient (would need to be wall mounted, up on
a small shelf, bracket, or whatever)

c) some sort of hardware based telephony that works with Linux
just by plugging it in to the Linux PC, and then which allows
people to just plug their existing telephone into a jack on it?

(my current long distance solution - pingo - puts part of the calls over the internet, but acts like a calling card on my end. While it costs just 1.8c a minute, it is trouble prone when calling maybe 1/4 of my relatives. I need something that gives a better voice quality than it offers, but especially fewer disconnects)

If I can get answers to these 3 things, I think I'll be able to set
all of this up in a way that my wife will use without complaining about
the changes. It would also allow me to finally drop my landline telephone, which would save me over $340 a year. (probably enough to pay for the Linux hardware in the first year)