128MB of RAM is an absurdly low amount for a NAS server. You might as well run a webserver on an Apple IIgs while you're at it. Performance will be terrible regardless of filesystem type, since you can't take advantage of prefetching and caching.
My Netgear ReadyNAS (Linux/SPARC) has 1GB of RAM and it's over a year old. Surely the hardware available now has more than 128MB of RAM.
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