Well, HALlo there!
As was mentioned, the new OS release (OS4) is soon (months) to be released and you ought to think carefully before spending money on your old 1200. Your choices are:
1. Beef up the 1200 to minimal present-day standards (cable modem, OS3.9), possibly an accelerator. There are several accelerators on the market, the best is probably the Blizzard PPC. But this is unlikely to be able to run OS4 when it comes out.
2. Buy yourself an AmigaOne (pure PPC). At the moment it will only run Linux (and anything that Linux can run, including Mac-On-Linux). The release of OS4 for the AmigaOne is still some months away, we've only seen demos of some parts of it so far. When it comes out, you will NOT be able to run old metal-hitting 68k games on it.
3. Buy yourself a Pegasos (if you can find one) and go the MorphOS way. It's PPC, it's fast, and claims to run 68k legacy Amiga apps. Don't know about custom chip emulation (Nate, can you answer that?). Pegs are scarce because only a fixed number were made. A new version (Peg2) is in the works but not yet available for sale.
All in all, I'd spend the minimum on the 1200 - enough to get it on the net and no more. I'd defer any other expense until the market clears in a few months' time.
tony