Okay my questions is, what would be the best way to set up my DNS. I'm currently running my own DNS off of my server, but i only have one server so both my nameservers are in the same location. I've heard of people using 3rd party DNS services, and etc.. but I'm slightly confused as to how this process works, and if its actually useful or not.

Can anyone provide some input that would point me into the right direction?

As far as I know, you can run your primary nameserver on your box, then secondary on the ns2.servermatrix.com box, so that gives you two locations for robustness. Someone may want to correct me if I'm wrong though

The best way depends on how many domains you have.

I've got my primary ns on my server and then have two of SM's servers acting as dns slaves for me. So it's no problem to update. it does take a bit of initial setup though.

Or you can use orbit to manage your domains in Sm's nameservers.

Or you can use a thirdparty dns provider... i use zoneedit.com as slaves for a few domains.