Cheap home sever

WD MYCLOUD: http://www.wdc.com/en/products/products.aspx?id=1140

This is definitely what you want, and you can get a 3TB model for $160 (everything included).

It's small, quiet, and attaches to the ROUTER and thus is available to all computers. It appears under Windows Explorer-> "Network".

Nightly Backups:
1) I have Acronis True Image to do a compressed Image backup. I could backup to the WDMYCLOUD if I wanted to; in fact my brother-in-law does though we both have it AUTOMATED to a weekly backup.

*Any device attached to the router whether Ethernet or Wi-Fi will have access to the WD MY CLOUD though speed of access depends on other factors; Wi-Fi is dependant on your Wi-Fi connection (i.e. 7MB/second). Using straight Ethernet Gigabit capable routher/cables I got 90MB/second at first. It's probably lower now as it fills up but that's pretty fast.

2) SYNCBACKSE: I use this to automatically backup my "Documents" folder on a DAILY basis. There's a free version that works fine.

Other:
The WDMYCLOUD has a hard drive already inside. If you add another one it can ONLY be used for a backup of the WDMYCLOUD (which it handles itself). I have a 4TB WDMYCLOUD and attached a 4TB Elements to it as I backed up a lot of my DVD/BD rips to it and use it to share videos to any PC, or Media player attached to an HDTV.

(The WD MY CLOUD simply wakes up the backup USB drive once a day, then deletes or adds files as appropriate then the backup USB drive times out and shuts down.)

Also, I believe the WDMYCLOUD idles at about 5 Watts so it doesn't generate much heat or noise. There's a DELAY when accessing it since the hard drive shuts down after ten minutes of no access. So perhaps ten seconds at most to start? I can't test right now because my parents are watching a movie on it. I could access it as well (no issues with multiple access) but I can't test startup time since it's already running. Typical for a hard drive I guess.

STORE: http://www.newegg.com/Product/Product.aspx?Item=N82E16822236621&cm_re=wd_my_cloud-_-22-236-621-_-Product

*A lot of the comments are no longer valid. It had a lot of issues at first that got fixed in software. It's important to note that if you want to access the folders it's simple but you have to choose the right ICON as some tie into Media features. I can access it in Windows Explorer-> Network-> Computer (or "Storage").

If I choose to access it under "Media" it brings up a useless interface to try and manage my media (Video, Audio..) such as Windows Media Player. I use KLITE and just browse the folders like a regular hard drive.