If you are considering getting a cheap old Mac to use, I suggest you buy a Mac Plus or SE with a hard disk. You could also buy a Mac Classic, Classic II or SE/30, but they don't come as extremely cheap as the Plus or SE and they can't handle many of the really old games if that's what you are looking for.
If you want the best machine with classic design, the SE/30 is my favourite, especially as it can run under System 6, but the Color Classic of course has color monitor, LC card slot and very nice looks. The drawback is the price, as it has become a popular collectors item.
By the way, the SE/30 should have been called SEx to follow the name given the Mac IIx, where the x means it's got the 030 processor, but for some reason that didn't happen :)
Ok, lets say you bought a Plus, SE or SE/30. What System version should you use?
Well, if you want to play old games then System 6 without multifinder activated is the way to go. System 6 also offers the highest possible speed. The last version was 6.0.8, and 6.0.7 if you want a localized version.
System 7.1 or 7.0.1 is what you should use if you want to run newer programs, surf the internet and stuff like that. To run System 7 you must have 4MB RAM in your machine. In the SE/30 you could install even more.
It's possible to run System versions up to 7.5.5, but the drawbacks like reduced performance and very little free memory makes it unpractical to use.

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