This is a question everyone must struggle with when building out their datacenter. Storage choices are always the ones I have the least confidence in. David Marks in his blog You Can Change It Later! asks the question Should I get a SAN to scale my site architecture? and answers no. A better solution is to use commodity hardware, directly attach storage on servers, and partition across servers to scale and for greater availability.
David's reasoning is interesting:
It's hard to beat the power and flexibility (backups, easy to add storage, mirroring, etc) of a good SAN, but Mark makes a good case.