After installing System [Mac OS] 9, and updating it (at least) to version 9.1 (or all the way to System 9.2.2 [recommended]), you may have to install the '
iMac Firmware Update 4.1.9'. I say may, because I did install MacOS X 10.3.x, and a respective update, on a Summer 2000 iMac DV SE, without any Firmware updating.
Whether or not you performed the Firmware update or not - consider updating System 9 to version 9.2.2, if you have not already.
Install MacOS X. I agree with MisterMe - unless you want to use 'widgets' and / or there are some 'Tiger' (MacOS X 10.4.x) specific applications, consider installing 'Panther' (MacOS X 10.3.x).
MacOS X 10.3.4 is where I return to when doing 'Panther' work; however, I have multiple partitions with multiple Systems / MacOS X'es installed.
Those using "iLife '05" are required to install MacOS X 10.3.7 or above. With this perspective, then MacOS X 10.3.9 is the better choice.
Thus, as told by others and above - the version of MacOS X you install, and then update / upgrade to - depends on the applications you intend to use.