So I made the plunge and purchased a NAS. I got a Buffalo Technology product, but not the one that I previously mentioned. The difference between the Linkstation Home Server and the Gigabit Linkstation is DLNA certification for media streaming to a very few certified players, which seems to add about $75 to the cost. In 5 years I may regret it, but right now, I'm pretty happy with the HD-HG300LAN. I'm also somewhat future-proofed with the Gigabit option.
I moved all the data from my external USB drive and scheduled backups onto the USB drive (my external USB is now strictly a backup device). So far, so good. The downside is that the data transfer had to occur over the network since the NAS web interface doesn't allow any file manipulation. The firmware (v1.42) is pretty rough around the edges, and setting the security up hasn't worked so well, but everything else has worked as advertised, and pictures of Kathryn are now backed up.