Apple has pumped up the capacity of the Time Capsule [1], adding a 2 TB model for $499. The 1 TB version remains available, reduced from $499 to $299. The 500 GB Time Capsule has been discontinued.

The Time Capsule can host Time Machine backups on a local network, as well as acting as network-attached storage over AFP and SMB. The product also includes all the functionality of the simultaneous dual-band AirPort Extreme Base Station.

I've been down on Apple for a while for charging $499 for the 1 TB Time Capsule as drives of that capacity dropped to $100 or less, even with some of the same server-grade specs as those used in the Time Capsule.

The new price is in line with the value of a $179 AirPort Extreme plus a hard drive plus a little something for putting it into a single box.

For more information on using a Time Capsule for backups and networking, see my book, "Take Control of Your 802.11n AirPort Network [2]," and Joe Kissell's "Take Control of Easy Backups in Leopard [3]."

[1]: http://www.apple.com/timecapsule/backup.html
[2]: http://www.takecontrolbooks.com/airport-n?pt=TB989
[3]: http://www.takecontrolbooks.com/leopard-easy-backup?pt=TB989

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