There are Ethernet appliances that will act as a Network Attached Storage (NAS) servers. Some will even let you attach those horribly slow USB drives to them.

I propose a device that emulates a virtual disk using remote physical storage that is located over a TCP/IP network. Its initial interface would be USB, hopefully with a SATA interface in a future version. Basically, this solid state device will simply behave as an external USB HD to any device connected to it. Via network configuration, the device will internally mount virtual disks from a one or more network hosts. It should offer features such as a TCP/IP offload engine, web configuration interface, and unpnp compatibility.

The device could use 3+ different types of remote virtual network storage.
1. Standard Windows and Linux NFS hosts
2. iSCSI hosts
3. Etherdrive hosts (http://www.coraid.com/)

Interfaces:
1. GigE (gigabit Ethernet) (x1) future: 10GigE copper (CX4)
2. USB 2.0 (x2) (acts as a standard USB drive)
3. eSATA (acts as a HD, not as a SATA controller)

There is plenty of cheap or low cost licensable technology that would make this device quick to bring to bring to market.

What would it be used with?
There are many devices that only have USB ports for storage expansion. This includes things like Dish Network ViP line of satellite receivers. These receivers use USB for external storage and are currently limited in options. With this device you could create a virtual drive image on an existing home computer, map its configuration, and provide a speedy virtual drive to the receiver. You could also dynamically switch the images on host computer allowing you to store all the media you want on the dish receiver (or other device). For example, you could store 750GB of sci-fi, 750GB of drama, 750GB of......

Price
The cost of the unit should be under $150-$200.

Host software:
There are already plenty of software solutions for the virtualized disk image and file sharing host piece of this product. It would be a matter of combining a few products from various vendors (Coraid.com rocketdivision.com DLink.com etc), applying licensing that kept the price in the consumer, not high end business, range.

It is important to note that this device would have to perform very well or the market will have an easier time of dismissing it.