Just make sure that it's not the only place you're storing your photos... hard drives are not reliable and external hard drives are difficult to scan for errors.
I actually recently ripped a 160g drive out of an external box and stuck it (along with a couple others) into an old PC I built as a NAS box. But all my photos are burnt to two DVDs, one of which goes in my fire safe. I have thought about trying to store all the RAWs on the network somewhere, to make it easier if I want to tweak an older photo, but I haven't done anything like that yet. I'm always fighting running out of disk space, no matter how much storage I have... funny how that works!