I ended up replacing it all for about $1000 shipped (1.7T Raid 5). It can support 4 2T HD's and
The NAS server is the 409+ non-rackmount from Synology (same-as/replaced-by the 410):
I spent quite some time researching the HD's to use and settled on these:
The newegg support was quite nice in helping m get drives from different batches (overkill, but nice).
It has worked fantastic. Supports timemachine and itunes naively, is a media server (integrates with my segate freeagent theater+ and PS3 seamlessly), the download manager rocks, and all our photo's are served up to the extended family (yea dyndns integration). Also integrates with UPS, external drives, and broadcasts the UPS issue to all my machines on the network. support for everything (and I mean everything.)
the admin interface this thing comes with is fantastic (linux on it with busybox and the ability to add your own packages):
little box seriously rocks.