I've been running the household media and file storage off of Windows Home Server for over a year now and it works great as a centralized file store/media server.
I've been looking forward to version 2 of WHS, which goes by codename Vail, for quite some time. This is especially true since MS demoed a WP7 app that can access a WHS server from anywhere on the interwebs at CES. But alas Vail has also been through some trails and tribulations since MS announced they are dropping the drive extender technology (basically a software managed JBOD raid that allowed you set set up massive and arbitrary storage pools and easily manage them).
While there are rumors of an impending beta of Vail I am not seeing much out there. Today my one MS Connect product suggestion went from Proposed, to postponed and then to closed. I'm not sure if that means "we're cleaning things up in preparation for defining the final feature set" or "we're cleaning things up because we're closing up shop on this thing".
I sure hope they don't kill WHS. It is nice and easy to install and manage and most of the other competitors out there for a consumer based "server" slash media system are all linuxy; and my brains just to small for remembering how to configure a linux server, especially if I want my XBox to see it.