You could absolutely do that, especially if you just use one or two external drives. Any more than that and you start realizing you have to plug them all in somewhere.
WDTV Live SMP with WD EX4100 NAS
Polk RTI8 Front, Polk CSI5 Center, Polk RTI4 Surround
MTX SW2 12” SUB, Sharp AQUOS LC-70C6400U
URC-WR7 Universal Remote
Motorola QIP7232 (P2) FIOS DVR, Sony BDP-S590 Blu Ray Player
Marantz SR5010 AVR,Technics SL-B20 Turntable