I love my Windows Home Server, it's saved my *ss and my marriage. ;) I bought an HP MediaSmart Home Server from Amazon. You can get various sizes, from 500gig up to 1.5 TB.
I think the best deal is to get the smallest one you can afford, and upgrade it when you start running out of space. That's what I did. You really can't go wrong because it's like butter (yes, rich, creamy butter) to upgrade.
When I first started, I had the two 500gig drives it came with. The HP supports up to FOUR drives at a time internally. Because I can't stand the empty slots, I threw in whatever drives I had lying around. I ended up with a 70gig (I have no idea why I put that) and a 300gig as drives 2 and 4. This gave me a total of about 1.25TB. This was fine when i started, as I only used up like 50% of the capacity.
Fast forward a year or so later, and I'd only had less than 20% left. A lot of space was taken up by backing up 6 different Home PCs, and a lot of was taken up by Family Photos and Videos from my new HD Camcorder. It was time to upgrade.
The system is always duplicating your files on as many disks as possible. It's not RAID, but it effectively gives you the same level of assurance that your data won't go missing. What's nice is that it supports drives of different sizes, rather than using either insisting on the same size driver, or using only the smallest drive size for all drives.
Here's how I upgraded my two smallest drives to new 1TB SATA Seagates.
Make as Much Room as Possible
This isn't 100% necessary, but I noticed that a LOT of my space was taken up by backups going back as far as 3 months. I really only needed the most recent ones, so I went into the Home Server Console and clicked "Backup" then "Backup Cleanup." This happens on Sundays automatically, but it's a good way to make a little space before a hardware upgrade like mine.
This operation, as with most "large scale" operations, will take a while. Maybe 10 minutes, maybe an hour, it depends on how large your stuff is.
Warn the Home Server you're Removing a Drive
Now you need to warn the Home Server that you're removing a drive. This is important so the Home Server can make sure ALL your files are sufficiently duplicated on more than just 1 drive. You are removing one, and it needs to make sure each file is on at least 2 other driver, as I understand it. This can also take a while, although it didn't for me.
I right-clicked the drive, clicked Remove. It tells me not to turn the machine off, etc.
When the drive is "remove" from the software, but not yet physically yanked out of the machine, it'll show up in the list as a "Non-Storage Hard Drive."
Notice that my free space went from 1.2TB to 1.02TB, so I lost about 200gig in this removal process. Also, at this point, the lights on the front of my server are 1 pink (the removed drive) and 3 blue (the remaining healthy drives.)
You can technically pull these drives out and put them in with the machine is running, but I'm still paranoid and I figure it never hurts to shutdown first (which I didn't do in this particular picture.)
Swap the Drive Enclosures
I like the enclosures on the HP because they are tool-less. They require no screwdriver, you just pull aside one edge and these little rivets (not screws) pop themselves via a tension spring into the screw-holes on the sides of the drives.
I put the new 1TB drive in the old drive's enclosure, and slide it into the HP. Push it into the machine, turn it on (again, I've done this hot-swap before, but still) and run the Home Server Console:
The drive shows up as a Non-Storage drive, but I just click Add and I'm given the choice to add the drive to server storage OR to use it to Backup the Home Server and my files. (I use an external drive for Server Backup.)
It'll run for a bit. After it's done, I tell the system to Remove the last small drive, and let it duplicate onto the larger one. Then I yanked the second small drive and repeat the process. Now Home Server reports I have 2.73TB total space, with 1.74TB free.
I like having the confidence that I can do this again at some point in the future with more cheap 1TB drives or larger. The whole operation took about an hour.