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Internet SCSI is a standard that allows standard SCSI block commands to be transmitted over TCP/IP.  Due to the added overhead of TCP/IP it would be interesting to know how iSCSI SANs perform on SQL Server.  Obviously they are cheaper to own than a "real SAN" using Fiber Channel. 
In the performance hierarchy they supposedly are a little faster than NAS, but definitely slower than SAN. 
These SANs are fully supported on Win2003 using the MS iSCSI software Initiator.  This is a software implementation so the SCSI processing overhead will tax your CPU.   I can't stress enough the performance hit you will see if you use a software initiator. 
You can also buy iSCSI HBAs which will move the processing onto the card. 
Obviously the iSCSI SAN network needs to be both logically and physically isolated from the regular data LAN.  You can use the same hardware if you use VLANs properly.  Multipath I/O (MPIO) should also be used to increase performance.  It should be set for round-robin or least q depth.  Jumbo frames should also be used.  Specific settings are a little much for my knowledge...suffice it to say you better know your NIC settings inside and out.  Most IP storage adapters are similar to a traditional NIC except that they have a TCP/IP Offload Engine (TOE) on the card.  Again, we need communication to be as fast as possible. 
You definitely want to keep your I/O to a minimum so bulk up on SQL Server memory if possible. 
Benefits of an iSCSI SAN
  • ability to use WiFi (potentially)
  • server and storage consolidation on the cheap
  • alternative to NAS for not much more money
  • cheap data backup, archive, remote site access

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