Help on HTPC/Home Server project

I'm looking to build a home server that can act as a HTPC for my home theatre as well.

Right now I have a Acer NAS which holds 4 1TB WD Green drives. This is running out. I will eventually have to upgade to 4 3TB drives. However, the problem with this is that the NAS doesn't support RAID but rather has this gimmicky "mirroring" system.

So I am thinking of a Core i3 based system, using the on-chip GPU for HD audio and video. Do you think that is good enough?

If that is good enough then the HTPC part of that is probably sorted out.

For the server part, I am thinking of just using the onboard SATA II slots for a RAID5 setup with 4 3TB drives. Do you think the onboard controller is adequate?

Finally, for the OS. Do you guys reckon Windows 7 ultimate is good enough? I am just thinking of making a shared folder where all my data would go, so the whole network can access it.

Any help on parts i should chose is appreciated!

For a pure file sharing server, a Pentium 4 would be massive overkill. This portion takes nearly no processing power.

I just build a HTPC with an i5 dual core and it is incredible. With hyperthreading on, it takes 12% CPU to watch a 1080p Bluray movie and around 2% for a normal DVD. I'm using a really low end 8000 series GPU for offloading, so I'm not sure how well the onboard works.

The onboard controller will likely work fine, but remember that if the motherboard fails, you will need that ICH chip (or newer) to recover your RAID array. For an OS, Windows 7 Home Premium would work fine. Is there any reason to drop so much money on the OS? Over here, we can get a 3 pack of Windows 7 Home Premium for <$150.