Yeah, it only holds one drive, so that may be a problem for 400GB. Some people are working on a Gentoo or Debian installation from scratch. So far, I've just been running it from my chrooted Debian install (kinda like my Empeg). I can't add kernel modules yet (so no CDROM access for ripping) but it serves most of my purposes (DHCP, NTP, DNS, SMTP, HTTP, SNMP, SMB, LPR -- any other acronyms??) out the box with Debian and apt-get. Plus, it has double the memory and a more powerful processor than the NSLU2. Its a little more expensive, like you said, it already holds the HD, so one less box to hassle with.

Checkout the gmane group which mirrors a Yahoo group for much more info.