First, the storage capacity:
1. An uncompressed WAV file (which is what you will have from ripping a CD or recording from an LP) takes up about 10.5 MB per minute of stereo - so figure ~50 MB per song for the average 4-5 minute song.
2. FLAC is lossless so only offers a compression ratio of roughly 2 to 1 - so again figure ~25 MB per song for the average 4-5 minute song.
3. 1 GB is 1024 MB so 1 GB is enough to store roughly 20 uncompressed WAVs or 40 FLAC encoded files.
You can do the math yourself
)) but just for reference I have 5075 uncompressed WAVs and they occupy 210 GB of my 300 GB drive. Double those numbers if you use FLAC.
Second, the music 'server':
Servers like the Olive, Sonos, MusicCast et al generally have nice interfaces and have the advantage of being a component that can sit in your AV rack but the disadvantage is high cost and limited upgradeability in terms of storage - not to mention no chance for backup.
IMO, a better approach is to buy a streaming device like the Squeezebox. It does require a PC to run its server software but then you have unlimited storage possibilities and can backup your music because you are using the hard disk in the PC.