Every one needs a low power server, my current recommendations are:
If you only require a Network drive this is a really good (cheap/simple) option (it does include some basic server functionality)
Icy Box Dual Disk with Gigabit NAS £100 http://www.scan.co.uk/ WikiSupport
However if you require custom services (Squeeze box, etc) then building your own is a good option:
Some thing based on an atom in a mini-itx form factor like: Jetway JNC92 £105
As much DDR2 memory as allowed (mini-itx often limits to 2GB)
Note: DDR2 is much more power efficient than the original DDR standard.
2GB DDR2 533MHz for the Jetway JNC92 is about £25
A cheap case like this from ebuyer would look reasonable for £25
I also installed Ubuntu on to an 8Gb USB flash drive for about £20. For wear and tear next time I would just use a laptop drive (£35 for a 120 GB or £50 for 320Gb), which could host the always on server parts like websites, torrents, ftp etc. and let the main storage drives spin down. If you are planning on this with only 2 sata sockets available you may want to put the laptop boot drive on a usb interface (£8 ebuyer, cant find summvision device)
I spent about £100 on a Jetway C7 1.2GHz J7F2WE1G2E not realising it could not take the Jetway expansion cards. As they make a very nice 3Socket 1GBit LAN Card. Turning your machine into a low power Gigabit switch as well (if you configure the OS to bridge the interfaces).
A nice alternative to putting together your own itx machine is the BBS2 for around £380 with the 2G RAM upgrade and VAT. Although 1 Drive must be the Operating System and since it uses its own mounting system low power 2.5" laptop drive can not be used for this task. It can then be set up with hardware raid on the remaining 4 channels, but Software raid is pretty good on Linux and Windows Home Server (Apparently)
The only really advantage of this over building your own system is the 5 Drive bays and Shiny case, which comes at a real price. Not forgetting if you built your own itx system you can easily add external usb drive to it, or get it to mount and share additional NAS drives like  or put in a large case and get some thing like this 12 port sata controller £600 or a 4 port sata controller £75
Note: The case recommended in  only has room for 2 hard drives using Raid1 or adding extra capacity the bootable drive if separate from the storage would have to be external.
Again the drive could be external in  if you wanted to use a laptop drive in 3.
Follow Up Post
Why put a Laptop drive in a desktop?