I run apache, mysql, ruby, php all on my desktop for development
purposes but I have a server for my live stuff.

The desktop has - well - a desktop whereas your server might not. Mine
does just because Im not the best at using the cmd line yet.

I set up a server for a school last semester. I put the gnome desktop on
so it would be easier for the local admin to do things. The server
version doesnt have it by default (correct me if Im wrong here) as its
not needed for a server.

I believe you are right. Server versions don't have GUIs and come with different
pre-installed packages. More importantly though the server version of Ubuntu LTS
has five year support instead of three year for LTS desktop and two years for
regular releases. You can count on Canonical to churn out updates for that long.
The correct server version to get five year support would be 8.04.