EDIT: Forgot to mention one of the biggest pluses. Microsoft pioneered a special file system for WHS called Drive Extender. There are no drive letters, just folders, and it spans across all your hard drives and future hard drives. No more "oh that video is in H:, oops I mean K:", it's just "It's in the video folder." See: http://en.wikipedia.org/wiki/Windows_Home_Server#Drive_Exten...
The best thing is that WHS is tightly integrated with Windows, so it has things like autobackup (selective and not), health monitoring (if any of the PC's hooked up at your home springs an alert, like virus found, or low disk space, etc, it notifies the other computers through dismissable systray popup), central user/password management across all your machines, and other cool things. Many companies have also developed plugins for WHS as well (useful things like PerfectDisk for defragmentation). It also works/integrates with Mac environment.
For playback of media content, I have two HTPCs connect from two different rooms as well as some Xbox 360's (yea, the xboxes just found the folders and was able to play the content. it just works). Also, I installed Air Video to stream videos to ipad/iphone.
And since it needs to be always-on, I hooked up a UPS battery to it. It's headless -- just the machine is needed, which is great for a server in the closet. You'll manage the WHS through remote desktop/web ui. You'll also want to get the Rosewill RSV-S8 -- you will need more and more space! (Some people have gone the "octopus" -- lots and lots of external hard drives hooked up through USB. I initially went this route but the throughput became a bottleneck so I got the Rosewill - See: http://www.newegg.com/product/product.aspx?Item=N82E16816132...).
Some use-cases: I've got private directories for myself, then I've got public directories such as Photos and Videos, with Photos being writable by certain members of the family. This means I can create a folder, say "07.04.10 July 4th in Boston", and each of us can upload our iphone/camera images to that folder. Now we have a global picture folder for the event we shared together. With Videos, since WHS supports Windows Media Center as well as just normal file streaming, I outfitted my WHS box with 1GBit ethernet card and the machine can stream out files to each of the HTPCs and other consuming devices.
Oh yea, the new Windows Home Server release coming out later this year is going to be even better. If you've got an MSDN subscription, download it and mess with it. You won't be disappointed. It's one of the best products Microsoft has put out.