Unless you are wanting to learn something new, I recommend using an OS that you are comfortable with. They all work and all have advantages and issues.
Watch out for some old hardware that is very power hunger. It's very easy to make up the cost of power by using a modern mini PC based on the N100 or newer N150. Check that the graphics drivers of the N150 will be supported for the OS you chose as it's still rather new. As for storage, internal, USB attached and NAS all work. NAS has the advantage of redundancy protecting you from a single drive failure though one must remember that RAID is not backup. Some OS support RAID as well though you must consider what the RAID recovery process is.
I totally agree with you regarding keeping things simple and how important the Channels DVR server can be to the entertainment in our home. Who wants the family breathing down your back as you troubleshoot.
