Well, the modem would allow you to connect to your ISP without having to tether your iBook to a wall jack. The Airport could handle the connection and you would be free to surf (albeit slowly) from anywhere in your house.
Otherwise, you have a wireless network in your home, but if you don't have a modem in your airport, you'd still have to get the modem cord out to connect to the 'net. Not sure why'd you want the Airport w/out the modem?