I have a buddy that's using a squeezebox with a cheap Atom 330 (dual physical cores and 4 logical cores) machine with a 500gig laptop drive inside. The machine is virtually silent and I think he was able to fit the better part of a few thousand CD's worth of FLAC files on it.

The machine he bought is one of these:

http://www.newegg.com/Product/Product.aspx?Item=N82E16856101079

Figure another $25-30 for 2GB RAM and $90-100 for a 500gig laptop drive and you've got a cheap/silent server for your music. He's running Redhat Linux on it and the squeezeserver application. Total cost for the "server" was slightly more than $300. The physical size of the machine is about the same as an Apple Mini.

Good times.