1) Do you already have a Mac?
2) I looked up your model and you might have an 800KB drive. Most, if not nearly all USB floppy drives cannot handle 800K disks. The solution would be to use an intermediary Mac that can handle 800K disks, like an SE/30, IIfx, IIci, etc. You could look into upgrading your system to handle 1.4MB disks -- there was an SE known as the SE FDHD, which had a Superdrive that can handle 1.44MB disks.
3) The best OS considering the limited speed of your system would most likely be 6.0.8.
4) Applications and games are varied, but serious work should be delegated to other platforms. macintoshgarden.org has an awesome collection for a start.