With Windows Home Server v1 being based on Windows Server 2003 Small Business Server you were limited to the features of Server 2003. This means no support for iSCSI in the case of my point today.
With Windows Home Server v2 (Vail) being based on Windows Server 2008 R2 Standard Edition, this opens the plethora of supported storage types to those supported in Server 2008 R2.
Server 2008 and Server 2008 R2 both have native support for iSCSI using the Microsoft iSCSI Initiator application from Control Panel. This is great news because it means that users will no longer be limited to USB or eSATA devices but can look to expand their storage out onto the IP space and look into opportunities for backup solutions for WHS using iSCSI.
Mark Vayman from the Windows Home and Small Business Server team posted on the Microsoft Forums confirming support for iSCSI along with a whole host of other features. My personal favourite besides iSCSI is the ability to now name the drives