Ok ok.. rotfl.. I must add to this.. I know about all this..
Cat1 - Phones
Cat2 - Phones
Cat3 - Phones/10BaseT
Cat5 - Data
Cat5e - Data
Cat6 - Data

Thats a cat rating from a text book from my lan specialist class.. All you have to do is make sure the color code is the same on either side of the cat3 for the data. but for the cost involved in the Cat5 (52 or so buks for a 1000' roll) its better to just use Cat3 for the phones and Cat5 for the data..

And no, Cat3 is much alive.. you can buy it at home depot, and it is widely used for phones/modem lines by some data installation crews.. Its kind of like the old BNC, its still usefull in some applications but there is another newer shinier cable in front of the Cat3