UPDATE July 13 2012: Synology will release DSM 4.1 (in beta now!) which will include a full blown video media centre system capable of transcoding, real time streaming, and even HD recording functionality. This will transform the NAS space in an incredibly good way. Now you can have Plex-like functionality on any Diskstation platform (and without needing to install plex).
I've been experimenting with a solution to back up all your media off your computers and onto a central place in the home. The main problem with media like movies, photos and music is that if they are available on a USB stick or a hard drive on a laptop or computer, then they are usually unavailable easily to any other device. If your home computing situation involves several laptops, an AppleTV or Boxee/Roku, an IPad or Android phone or tablet then you want to be able to share the media between them.
You also want to be able to backup your files and have them stored on a server somewhere hidden away in a closet, but you don't want to do too much to maintain it. It would be nice to have facility to allow streaming off the media to any other device. And hey how about ability to store home surveillance streams/pictures from your wireless IP cams? And a "download station" to download your favorite content while you sleep? Oh and yes, make it available to the Internet and run your own "private cloud" to access the content from anywhere!
Well you can build your own Network Attached Storage (NAS) device for a few hundred bucks or try out the Synology line of products. I got the DS111 device that supports just 1 drive, but Canada Computers has the new DS211j on sale for $159 after a $30 rebate. This is a terrific deal for a 2 bay device that pretty much does everything short of cook your breakfast.
The most amazing thing about this device is that after formatting your hard drive(s) it installs the latest version of what Synology calls DSM. The DSM is the operating system of your NAS and have no fear this is a full Linux kernel running a browser based operating system that allows you to install applications that extend the functionality of your NAS beyond what you get out of the box.Here is a screen shot of the DSM OS to give you an idea of how it works.
The list of applications is very impressive, although I have not tried them all. The sharing capability to setup a Windows or Mac (SMB or AFP) file server works really well. You can stream content to any device over your network. There is support for a DNLA UPnP server for Xbox360 and Playstation3. There is an FTP server, a Webserver, and even PHP supported to run your websites (!). The "download station" supports RSS feeds (use feedburner.com for the best compatibility) and can download your RSS feed content in the background as the RSS feed updates as per a user-configured update interval.
Finally, the new atv Flash (black) media player works really well with this NAS, which is the most important thing. There is a good discussion of preferred NAS devices at the firecore support forum. One thing I found is that my wifi router was acting up a lot, dropping connections. Once you have streaming setup from a NAS, your wifi router may start to hiccup more. To fix this, check the channel you have set for your router -- if you have lots of wifi hotspots in your area you will want to turn off "auto scan" on your router and select a channel not frequently used by default. I used channel 8, which seems to be working. Here is the screen shot from my DIR-655 router to indicate the setting. This is crucial for wifi success, because if you have a persnickety router dropping your connections your NAS will be sitting there useless because your clients won't be able to connect to it.
UPDATE: Note that any hard drives you put into a Synology NAS enclosure WILL BE REFORMATTED in ext4 format. That means you will have to load up your hard disks with backups of your files. You can use a USB key or an external hard drive attached to one of the USB ports on the outside of the NAS. There is a one-button copy feature that places all the files in the "public" folder, and then you can move the files using the DSM. The upload over the network feature out of DSM is slow and probably not the way you want to go if you plan to load up the NAS with 10-several hundred GB of files at the outset. This is the only part of the process that's not ideal. MAKE BACKUPS OF EXISTING FILES FIRST!