Why not just buy two external 500 GB Western Digital HDs for $300 and USB them to your computer? (Picked the same brand they mention and quoted the price from Best Buys website)? This would also allow you to keep one off-site in case of theft/fire/etc.
(I'm a computer dummy.)
Basically, this product is a combo NAS device with a DVD drive bundled into a single package. One of the advantages of NAS is, for example, the ability to stream from a music library to a Squeezebox without having a computer on (it is, in essence, a mini computer). It acts just like any other client on a network (even though it's referred to as a server).