CR,
I've run Seagate USB drives, 1.5 Gb or larger, for a few years now. The cost is typically well under $200. Backup software is typically already installed. I have thousands of lossless FLAC CDs on mine and still only about half full.
FOr an all in one type server solution, make sure there will be enough disk space and/or that space can be added as needed. Many such devices I see have fixed limits. Also make sure there is a practical way to do teh backups. ALl devices eventually die, so you must have a backup of all the files you took so much time to rip in the first place.
I tend to stay away from server type devices from audio companies in that you generally will pay a premium for what you get and be locked in to some degree, but some may go taht way for the extra convenience and perhaps ease of use. YMMV.