What Apple calls the network password is what everybody else calls the WEP key. WEP stands for "Wired Equivalent Privacy," which overstates its security by a lot, but it is a good way to limit users to those you've given this password. You should use the strongest WEP encryption your router supports-probably 128-bit.
Use something like WEP Key Maker (you can find that on Apple's site) to generate the key from a passphrase, and you can simply tell your friends/users the passphrase and let them re-generate the key.