Help designing mac mini music server


I want to set up a mac mini as a music server. Looking for recommendations for set up including 'cost effective' DAC, connections to external drives etc. Pointing to past posts is fair, as I would guess this has been asked before.

Have several music systems, so long term wouldn't mind being able to use multiple audio systems in the house. Main objective right now is to set up the server.
gonetotc
Lokie, I think your math is a bit off. Unless you are ripping into MP3 or AAC,
each CD will need about 250 to 350 MB in Apple Lossless format.
Gonetotc - I use Intel Mac Mini/Snow Leopard with 1TB external triple interface Fantom drive GF1000T (Newegg.com $100) while I keep backup on the second identical drive (Fantom drives are quiet, run cool and have very good reputation). I use firewire interface since it uses very little of processor power. I use Benchmark DAC1 - it is jitter (noise in time domain) rejecting and Mac Mini has only optical output that inherently has twice more jitter than coax. Because of the distance (across the room) I use Airport Express and short toslink. I rip files into Itunes in Apple lossless. For ripping I use MAX (free program) with cdparanoia algoritm option set to "don't allow to skip". I use Benchmark (has volume control) to drive power amp directly.

Three comments:
1. If you think about Benchmark DAC1 get new one since old had a lot of problems (revisions) and Benchmark provides 30 day period for evaluation.
2. Front Row does not work with newer Itunes or Leopard - you need to install Airfoil application (but remote control still works with I tunes).
3. Keep backup outside of your home in case of fire burglary etc.

Thanks for everything so far....

Some more info on my situation...

I think I need:

- a server (the Mac Mini with external drives (appreciate the info on the NAS)
- an interface (haven't decided that one yet, but think my simplest option is a keyboard and monitor (hopefully the TV associated with the sound system) attached to the Mac Mini, better is a iTouch or iPhone)
- a way to convert the digital output from the server to analog (biggest area of uncertainty for me... and most variable)
- a nice to have is a way to use this on more than one sound system in the house (via airport???)

As for budget, I tend to like bang for the buck vs unlimited. Looking for cost effective conversion.

What are the range of options for digital to analog conversion including approximate cost? For quality, everything I have seen points to a DAC vs soundcard, so what are options:

In the under $300 range?
In the $300 to $500 range?
In the $500 up range?

What am I giving up at the lower range?

Thanks....
I had trouble with set up on Buffalo NAS, and found their support negligible. Sent it back. YMMV. John