Got a good question today about personal storage. Does SharePoint replace H or U (home, personal or user) drives? My answer is it depends. First what is your personal storage service today? Are you telling your users to store everything there? Is it essentially a backup of the user desktop or is it a network storage location of personal content? That is the key.
As a Desktop Backup Solution
If it's about backup and there's some process to backup the content of the drive to a network location of 5-10GB or more, then no SharePoint is not a good replacement. First it's not cheap storage, second it's going to require a bit more overhead in this transactional system which isn't designed as a backup solution. Groove as an offline peer to peer client with synchronization to SharePoint may give you some of this as a solution.
Network Accessible Content
If it's about getting users to store content not to their desktops, but to make it accessible from multiple locations then you betcha, SharePoint is a good design and users will find it extremely useful to find their office or other desktop generated content on their my sites. The power of the "my documents" folder redirection technology was all about being able to login anywhere and magically have your files in a seemless way. Quotas, bandwidth, and latency introduced some challenges that ultimately made this a support burden and managing thousands of security groups to push users across large LUNS was a management nightmare. Maybe you could do this with a small support group, but it still didn't give you the dream of zero admin. Essentially a DFS tree with some user training could get you past the supportability issues, but didn't deliver the goals of the CEO to make it searchable and discoverable and in steps SharePoint where users could categorize where the content should be stored and who should have access. Sure it requires some training and forethought... and yes, that is the hard part.
Personal and Shared Storage
Some companies that used the traditional Novell network shares had U drives and S drives or whatever letters you chose. Even Microsoft folks found creating these handy drives getting mapped at logon made it easy to provide simple user and shared storage to promote collaboration in an easy to backup network based solution. (DFS, DFSR, Clustering, and Shadow copies and quotas in Windows Server 2003 brought these a long way. Thanks Brian Dewey, Vishal and Paul. Good times. If you ever think I'm just a SharePoint guy, look up some of my work on Shadow copies and VSS. I was on Brian Valentines showcase of the day around the 2003 launch. :)) These personal and shared drives allowed easy access to share content. The ways of the future are definitely to make this collaborative content accessible over the web. Shared storage with a rich web interface, search, makes it an ideal collaborative environment with an optional Web DAV/Web Folder interface for a traditional access method if required.
File Type Challenges
Rather than rehash all the file server and file type challenges which are essentially the same for personal storage as they are for shared storage, I'd point you to my posts on Are file servers dead including some tough questions on the topic and What NOT to store in SharePoint to give you the gist that scripts, executables, multi files, CIFS links, some linked spreadsheets and some access databases (this has gotten better in both Excel and Access in 2007), and multi user access.
What to use?
I hear many a CIO who says we must reduce the end user confusion about storage. Yes, you must. Microsoft can provide you some guidance, but notice we aren't turning off your file servers, we're not turning off your public folders, or your my document folder redirection. We are giving you options and fortunately or unfortunately you have choices. My choice based on the options given here would be to make sure I had a backup option for desktops, then eliminate personal or private storage on file servers. It's mostly junk that gets backed up like it's changing daily. With SharePoint you can backup differentials which you could also do on your file servers, but why have all that data as inaccessible online backup storage? If users get 1 or 2 GB of personal storage or even a few hundred MB, they'll be smarter about what they store and they won't be backing up their hard drives (especially since you'll be blocking many of the file types and file sizes for what they might want to "dump" there.)
Stretching the Technology
I remember a guy in IT who was using briefcase with SharePoint to get his files offline. That kind of magic isn't something I can recommend as reliable. What about using DFSR to replicate content between two locations mapped as Web DAV drives with a machine that combines the two. Again, not something I can recommend... What about mapping my docs to a mapped drive that's the Web DAV/Web Folder. Again, let me explain, I do not believe Web Folders to be reliable enough to map consistently on start up of a user machine. I've seen way too much flakiness in the web client on XP, and haven't seen it enough in Vista to see if it's really much more reliable. Latency and network startup challenges alone would make me caution any enterprise against it. I've heard of a few attempts, I'm sure many would be interested in hearing your results if you get any of these magical solutions to work. Unfortunately the "save as" dialogs haven't reached where they should. In the mean time Groove, Colligio, and other SharePoint clients can capitalize on this lack of making it simple enough to save to a SharePoint site. Vista has come a ways to make it easier, but why can't it remember that I just saved a doc to my my site, and I now want to save to it again. Speaking of My Sites, I've copied my presentations from my my site and will be including links to my decks as they relate. Sure enough I did a deck on File Shares back in 2005 on SPS 2003 vs. DFS and a session on File Servers vs. SharePoint at TechReady4 an internal conference. Don't be convinced by a WAFS guy that optimizing the File Server stack optimizes SharePoint over the network. There are optimizations in Windows Server 2008 that do help propagation for Indexing and overall network traffic, but optimizing a file server is not a direct correlation to optimizing HTTP.
Presentations on File Servers and DFS as they relate to SharePoint and Networks.
Windows Server 2008 even makes the network more interesting when you look at SMB 2.0. I included a couple of performance slides in my Windows Server 2008 for SharePoint Admins talk at the SharePoint Conference.