Windows Home Server's idea of redundancy
Currently, I use the Infrant ReadyNAS NV and love it so far. It uses "X-RAID", which is basically just RAID5, though they like to sound fancy with X. It supports 4 drives, and with RAID enabled, you essentially get the capacity of 3 of the drives. This allows for better cost per GB than some alternatives like RAID1. But the disadvantage is if you eventually max out your drives, you can't dynamically expand beyond the 4 drives, and it is difficult to remove the drives and replace them while preserving the data.
Windows Home Server's concept of storage is to treat it more like a pool. You don't have drives, it simply collectively manages the drives, no matter how they are connected (SATA, USB, etc). With this, you have much better expandability.
The problem is with how Windows Home Server does redundant storage. You can mark certain shares as ones that will be redundant, so then WHS will ensure that all files are located on at least two drives, so if one fails, it can be replaced and repopulated with the files it stored. The disadvantage is that this is essentially RAID1, where each file takes up twice its actual size. But the advantage is that this is only for shares you want to be redundant. Ones that aren't redundant will only take up 1x the space.
This makes sense and sounds pretty good, but then I was thinking about something. Why would I put a file on a network share that I don't to be redundant? Think about it... lets see what is on my network share. System images? Don't want to lose those. Saved photos? No, definitely don't want to lose those. Archived documents? Nope. Financial data? No. MP3s/videos I've downloaded or purchased? Nope.
If you are going to bother with putting a file on a network share, where it is accessible, but not highly accessible (it is there when you need it, but network shares take a hit on performance vs. local)... why would I put it on a network and not want it redundant?
Overall, Windows Home Server looks attractive for its PC maintenance functions and expandability, but not really for data reliability. Perhaps the better option would be a Windows Home Server married to a service like Mozy. Though that may require another PC to be on to send the data.