One of these would be perfect for that case, and not be extremely big like a full size rack.
http://rackmountpro.com/product.aspx?prodid=1309&catid=263
At least this way when the server needs to be rebooted for any reason it will boot faster and still have a descent amount of space for whatever apps may be used for the OS.
I just read through this, and since I notice there hasn't been an update in a while I have to ask, has anything new been added or changed in this setup since the last posts?