SAN (iSCSI, fiber channel or SAS) is block level storage. This means you give a disk to a (single) server that is attached. The MD3220i itself cannot 'share out' disk space like a share in Windows can. However, the 'front end' server as you call it can share out the disk space to your users if you want.

SANs typically are used for critical environments where uptime is important. A single controller would mean that if that controller were to fail, you'd be down till Dell gets a replacement controller to you (the time this would take would depend on the warranty that you purchase (and a few other factors). With dual controllers, if 1 controller fails, the other keeps you up and running while you work on getting the faulty one replaced (typically without downtime).

I think Dell will sell an MD3220i with as few as 2 drives. You can then hot-add extra drives (and add them to existing raid sets or create new raid sets) on the fly. Note that this system is only compatible with Dell MD32xx-series drives; retail or generic OEM drives will not work. If you outgrow the MD3220 itself, you can purchase an MD1200/1220 (this adding does require downtime) and then populate it as well till it is full again. I think the default license supports 120 drives (any combination of 24 and 12 drive enclosures) and you can buy a license to upgrade the drive support to 192 drives (one of the new features of the 07.80 series firmware).

Full HA is generally considered important on iSCSI sans.    If this is not supporting mission critical functions?  Then a single controller is fine.

If the added cost is going to make or break the deal?    I'd go a head and put it in with a single controller with and understanding that it should be upgraded in the future.

Right now we use an NF500 that is full and it is out of warranty since it is very old.  I want to upgrade my storage to a nx3100 in the first quarter of this year then add md3220i at the end of 2012.  Is the nx3100 overkill for the server that the serves out the share?  Plus how does the MD3220i work by allowing up to 32 servers to connect to it if the main server shares out the space?  thanks

Sans work differently than NAS.    In an MD san you decide how many spindles you want in a disk group, then how many virtual disks and of what size you want on that group, then you map the virtual disks to the hosts and/or host groups.

You have to add each host to the san, you have to decide to put them in host groups or not.

In the end the hosts (physical servers) only see the Virtual Disks you have mapped to them.

Also; virtual disks cannot be shared between multiple servers unless those servers are clustered (otherwise data will end up corrupting).