Well the literal answer to your question is that it's a NAS, so the OS isn't "built-in" per se. Instead, it comes with an install disc that you use once you've put your drives in, and it installs that OS on those disks, after which you build your RAID array, install whatever additional packages you want, etc. But yeah, the OS is part of the package, and it's pretty nice.

There are a bunch of different Synology NAS models with different disk configurations and varying amounts of CPU horsepower; I went with the DS1511+ which offers 5 disk bays and has enough CPU to run all of the add-on packages I've tried so far.

The media stuff seems to work well. It just scans your drives for media files in whatever folders you tell it to and they show up in the PS3 UI. Not much to it.

Squeezebox server is really easy because it's one of the officially supported packages that shows up in their Package Center control panel thing without having to add 3rd party package repositories. Here's a pretty comprehensive list of the supported packages. I had to set up a 3rd party repository to get the Crashplan package, but that was pretty easy, too, and it works flawlessly.