With 1TB SATA disks on the market, surely the unit can support those?

Not with 2.5" drive bays it can't

it only supports 2.5" drives and TB drives are only available in 3.25"

I'd imagine that if you were buying one of these, you'd have a separate storage solution,

The C4108 uses 2.5" drives, thus the lower capacity.

All their other 4 way servers support 2 TB + (SATA)

But also interestingly, all their other 4 way servers are running Opterons.

Maybe the higher heat from the Xeons makes for bigger cooling gear thus less space for drives ? Available power could be an issue too.

http://www.rackable.com/products/c4way.aspx?action=3&nid=servers_2

I do believe that its 1 TB/drive times 8 drives.

Surely with a box like this you'd only use local storage for OS and bung in some HBAs and grab all of the rest of your storage off of a NetApp\EMC\Whatever SAN