@As a backup it is a mirror i.e. ~RAID1
Disclaimer: I'm a Mac user, plus Solaris, Linux, Window$ etc, but I try to avoid Kool Aid ;-)
The point of Time Machine, apart from obviously being a backup, is that when you delete files on your Mac, you can retrieve them from your Time Machine backups.
So, when the Time Capsule disk dies you can't replace the data on it with what's on your Mac's HD, because the Time Capsule disk also contained all the files you deleted from your Mac over the months... see what I mean? You might want some of them back one day when you ask yourself "where have those files gone???"
Some more thoughts on Time Capsule:
I like Apple for simplifying things. They are great at doing that! And this is a simple solution for the typical Mac user, not cheap though.
Sometimes simple can be dangerous though -- consider what happens when the disk inside Time Capsule dies -- you lose your whole backup solution immediately, with err… no backup apart from your source drive perhaps, but see above, and then when you send the box back to Apple (shop), you lose your network too! Arrggghhh! ;-) Ooh, better remember to remove the pr0n too ;-) Oh hang on, the drive is dead though -- uh oh!
They say the hard drive is "server grade" which probably means it's an Enterprise SATA drive -- i.e. designed to be able to spin 24 hours a day in an enterprise RAID / NAS box. But that doesn't cost a lot more anyway for enterprise SATA disks (I don't mean SAS disks!). Let's hope it has good ventilation fans too to keep the drive cool. Data doesn't last too long on hot drives.
I suspect that Apple will only enable Time Machine to work with this box as a network drive until several months have passed and they have made their money, and people's voices have complained enough that they can't use their standard Samba/NFS share as a Time Machine target. We'll see!
As I'm a geek, I've built my own fileserver/NAS + backup solution built upon Sun Solaris and ZFS (all free and open source), and shared it to my Mac via Samba (CIFS). NFS sharing works too, as does iSCSI. See more about the amazing ZFS file system here:
So I expect my NAS box will remain unusable via Time Machine for quite a while. But then I have 2 other possibities until that time:
1) Use 'rsync -a source dest' to create backups similar to what Time Machine does (TM relies on the use of 'hard links')
-- see here: http://www.mikerubel.org/computers/rsync_snapshots/
-- and here: http://rsync.samba.org/examples.html
The above done via a Samba/NFS-shared target (i.e. writing to the Sun Solaris-hosted ZFS pool via Samba/NFS sharing).
2) See if I can use the Mac's ZFS implementation (from developer.apple.com) to do ZFS snapshots to a remote machine
And one of these 2 solutions is probably just as good as Time Machine for keeping data backed up -- just without the pretty interface :)
Oh, and I have redundancy built in, using single-bit parity RAID (RAIDZ1), plus a backup on another Solaris box done via an iSCSI link (iSCSI is free, out of the box in Sun Solaris too :).
If it's of any interest, I will explain this setup at http://breden.org.uk this weekend, if I get time, at least I'll kick off a series of HowTo articles.
But I do take my hat off to Apple for making a simple solution that anyone can use, even if it does have its faults. It should work for most people, and that's already a great step forward for most people -- having automatic, regular backups.
Now, hopefully Apple will open up Time Machine to working with non-Apple network drives/NAS solutions... play nicely, Apple ;-)
OK then, I'll get me coat -- it's the one with Sun/ZFS written on it ;-)