Jim, that is called mirroring, its known as RAID level 1. I have that in one of my PC's. I have a slightly more sophisticated version of that in my server, which is called Raid 5, in this case I have 4 HD's which use only 3/4 of the space available, instead of just 1/2 and when any one dies, replace it and you are good to go, no interruptions (theoretically). There is advantages to having your server seperate from the box IMO, mostly from a noise and EMI seperation.
I personally prefer the Squeezebox solution to the other solutions I've seen because of computer isolation, interface and ability to have noisey parts in another room.