FYI for those of you wanting to try 3rd party larger drives...
I have successfully R&D'ed and have a couple of production servers at clients running this config.
Seagate make an enterprise 1TB drive that works great with G5 Xserve's. I have one G5 Xserve running 3x 1TB drives, 2x as RAID1, 3rd as snapshot.
This has been running since October 09 without issue, reboots, booting after power loss, RAID is still active and reliable.
Apple have a matrix that says only certain drives can be used with Xserve models-
http://support.apple.com/kb/HT1219
I am in the process of testing the new 2TB Seagate enterprise drives, and what do you know, they work in G5 and Intel Xserve's.
At this stage the 2TB is just a single drive, I will be testing RAID1 on 2 of these next week.
Will update on progress then...
Ed
MacBook Pro 2.4, Mac OS X (10.6.2), 4Gb Ram