The engine room of my system is based around a couple of quite old PowerPC Macs with a few tweaks & additions to keep them ticking. Given the cost of setting up a full system I obviously tried to re-use old equipment as much as possible to allow me to invest in the more important features of the system. That said, I don't think you really need the latest gear for a server that is primarily about accessing content on a HD and piping it over Ethernet - if I was building again from scratch I'd certainly be looking around on the MacTalk forums to pick up a pre-loved G4 PowerPC as the core of the system.
The main media server is an old MDD PowerMac G4, dual 1.25Ghz with 2Gb of RAM and a simple 40Gb internal HDD. As the MDD is a little bit dated I've added a few PCI cards to update the box, including a 4 port USB 2 card and a dual-port Fibre Channel card. An Elgato EyeTV 400 (the original HD capable EyeTV) is used as a capture device for free-to-air TV, and an Elgato Turbo H.264 allows the server to convert captured TV shows into iTunes much much faster than the old G4s can handle by themselves. There's also a standard USB cable for syncing my iPod.
Obviously 40Gb isn't really a suitable storage solution for this type of work, so the server is connected to a fully stacked XServe RAID - 5.6Tb of storage across 14 x 400Gb drives. As each storage controller on the XServe RAID (there are 2) can only see one half of the connected drives I have configured the RAID as 2x RAID 5 volumes, each providing 2.2Tb of storage space. One volume is dedicated as storage for the iTunes library on the media server.
(For reference, I didn't buy the RAID new but picked it up ex-Demo from Apple Australia. It still wasn't cheap, but it certainly didn't cost $20K...)
All the actual media serving is simply performed by iTunes' built-in sharing feature. iTunes on the server is configured to use the RAID volume as the location for the iTunes Library, which I achieved by symlinking the Music folder from my home directory to the RAID (which you do via the Terminal). As long as iTunes stays open on the server (so obviously it is configured to load at login) then it takes care of all the media serving.
Building the server was pretty straight forward, as the machine is simply an OS X client (10.4 with latest updates). The media server was then installed with iLife 06 (to support iPhoto streaming, not that I use it), MacTheRipper and Handbrake (DVD encoding) and the EyeTV and Turbo H.264 software (for Live TV capture). The final addition is the XServe RAID administration software which allows control of the RAID device.