I was detailing the hardware upgrade path I took this past year. I emailed it to myself so I did not have to write it again.
The server I had built uses 2 sets of 500-gig drives, 4 drives in total and they use SATA RAID that is built onto the motherboard. It is built with consumer grade hardware with a single Quad-core processor and as much RAM as I could install which was 8-gigs. It was fairly low cost and works very well.
The next server i bought was a used HP Server. I had to put in SCSI drives so it has a bunch of 140-gig SCSI drives, Xeon processors and 8-gigs of RAM. The HP server has a built in device that allows me to remotely reboot the server (I forget what it is called but it gives me web-access to the BIOS) should windows ever go down and it has redundant power supplies.
The HP runs Windows 2008 32-bit and the home-made server runs Windows 2008 64-bit. So far I think I like the HP better and it was much cheaper. It is astounding the deals that can be had on used Servers. If you are going to use a secure data centre for hosting, try to get one that you can remotely reboot for those sad days when the OS stops responding.
In retrospect, I should have tried Amazon ECC. They will set up Windows 2003 in their cloud and you pay for the resources that you use. If you need more RAM, you get it boosted up etc. The price is incredibly reasonable and it seems like the perfect place for DIY people.