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Storage is the biggest issue. Also, the wireless card and antenna is starting to fail, or so I'm told by the folks at the apple store, and it would cost me upwards of $100 to get it replaced which is 1/5 of what I paid for my mini new. It will intermittently drop the wireless signal, which is extremely frustrating. My current living arrangements only allow for wireless internet.
For around $30 you should be able to get a USB wireless stick which take care of your wireless issues.Here's one such devicehttp://www.newertech.com/products/mxusb_gb.php
For music I think a mac mini and two self-powered drives would be ideal. One is for the tunes the second would be for the backup and you can keep the internal drive small. Self-powered drives will keep power-supply electrical noise and wall warts clutter to a minimum. If the plan is to keep this next to a stereo this would be my preferred option.
Don't mean to highjack the threat. But did have a question for Skunark. Do you mean bus powered (portable style) hard drives? Is there any downside to using the bus instead of a wallwart. I use a Mini as a dedicated music server and play music off an external firewire drive that has the AC adapter. Always looking for ways to improve the playback.
I currently play my music directly through iTunes. Would switching to Pure Music bring any improvement in sound quality?
Why not try the free trial and see if it works for you?