I currently have a Sokeris net4501 running Voyage Linux acting as a firewall using iptables. Is it possible to use iptables to log all websites that are visited? If not, is there any other software that I can use?
Probably not the way you are thinking. Iptables operates at the lower levels in the networking model. It doesn't really know anything about name resolution, or the HTTP protocol.
You almost certainly need to be looking at an HTTP proxy which you will setup to be transparent. Squid is pretty popular for this, but there are other choices. Squid requires more memory than you have to spare on that Sokeris box.