Based on what you have described, it appears that there is an issue occurring with a kernel extension, driver, or something along those lines. This is what is causing your machine to kernel panic when attempting to boot up normally. Safe mode is disabling the problematic "thing" and that is why you machine boots fine in safe mode. For more information on whats is going on when you boot in safe mode see Mac OS X: What is Safe Boot, Safe Mode?, this may be valuable in diagnosing a cause of the kernel panic on start-up.
So some next steps for you to take:
First thing is figure out what is causing the kernel panic. Boot into safe mode and then open the Console program. Located at /Applications/Utilities/Console
When in the Console application look for the logs noted as PanicReporter, if we are lucky there should be one for each time you tried to boot the machine with a failed boot up. According to Mac OS X: How to log a kernel panic, kernel panic logs for Leopard are stored in /Library/Logs/PanicReporter, so check for logs at that path in console.
If you find logs do a quick read thru of of the first 20 or so lines and see if you recognize the name for a piece of hardware /software or something, feel free to post what you find as well to help in solving the problem.
Once you have figured out what driver/s or extension/s is causing the problem the next step is to determine if it is a driver that you installed. If it is then look up how to remove and additionally re-install it or update it if it is something you need.
If its a driver for something else built into the computer it could be indicating a hard ware failure for some kind of device, eg network card, etc. Or it could be just a corrupted software driver, and you may need to backup your date and re install the Mac OS.