I actually work for one of those SAN equipment vendors. While the high-end products cost a lot, some customers *need* to put petabytes of data into a single high-performance box. Most such vendors sell smaller boxes (still in the hundreds of thousands) for smaller solutions. If you're looking for storage for a home network, you really want a NAS (Network Attached Storage) system -- which we also sell.
Internally, our systems have a large number of FC hard disks organized into multiple arbitrated loops for redundancy purposes -- so if one drive goes bad, it doesn't knock out the whole array (we also have multiple controllers that can be attached independently to each loop, to guard against controller problems). You interface to the box as a whole through either a point-to-point or switched FC network (or through IBM's ESCON/FICON protocols, but I won't go there. Suffice it to say it's like Fibre Channel for mainframes.) We're also supporting iSCSI (SCSI run over Gigabit Ethernet). Externally, the box just looks like a whole lot of SCSI devices to whatever you plug into it. One advantage of a system like this as opposed to a JBOD array is that there is a lot more flexibility in creating virtual devices and doing things like snapshotting and remote synchronization automatically. You also don't have to worry about getting equipment from multiple vendors working together.
And there are different levels of mirroring and protection. Not everybody needs what you described -- RAID5 by itself offers single-disk failover, and can be configured with 3-8 disks per raid group (with 8 disks per group, you need 8 disks to hold 7 disks worth of data). There's also straight mirroring (RAID0), which gives a 2:1 ratio of raw disk space to usable space, and provides single-disk failover, but also improves performance (since you can read from both disks simultaneously and you don't have the parity overhead of RAID5).
There's an O'Reilly book ("SAN and NAS Technologies" or something like that) which would probably tell you more than you ever wanted to know about all of this.