I manage about 10 mac mini's that are on all the time, most of them semi-enclosed in steel security brackets. We've had one hard drive failure in the bunch over the last two years.

It's not "server grade", but with two drives you can easily set up software raid. I'd much rather have a Mac-Mini-Tower also, but it's not going to happen. The xserve and mac pro are there if you need the reliability and part swapability.