Well, the main point is: the retry behavior of Western Digital Caviar slows down performance significantly, as compared to a Seagate drive. Though a sample size of 2 Caviar 1.5TB drives are not statistically significant, but both have exactly the same bad performance on the same computer (same CPU, same memory, same SATA controller, ... everything same).
To observe the Caviar getting itself into seemingly infinite retries, just plug the Caviar into a USB-SATA docking bay, connect the docking bay to any Linux machine and run badblock with options -w -s -v. For 1.5TB partition, it will take about over 10 hours for single pass of write-verify, and it will take 4 passes for each test pattern.
For me, both the Caviars 'failed' after the first pass, 'fail' as in it got into infinite re-tries (drive activity light stays on forever). For Seagate 1.5TB SATA drive, no problem at all, except that the drive servo voice-coil is significantly audible as compared to the Caviars.
In addition, when the drives are put into RAID arrays, the Caviars can do at best 65Mbps when synchronizing, while the Seagate can sync at sustained 75Mbps. This is not in-theory, but real measured numbers. You can try repeating the tests and share if the same observations are true.
More importantly, the Seagate drive allow configuring the TLER/ERC using smartctl -l scterc,70,70 to set read and write timeout to both 7 seconds (note: you need to download the bleeding edge version of smartmontools to have this command option). I did read the article pointed out, but as far as what I can observed for the kernel version in the DNS323, the TLER/ERC did made some difference. I did observed the Seagate drive doing a re-try when performing RAID re-sync, dropping to 20Mbps+ for a few seconds, while it is audible that the head was retracting. However, upon completing re-sync, I read the SMART info and did not find any re-mapped sectors. More importantly, the recovery was really quick, within 15 seconds, most importantly, it did not trap itself in infinite re-tries.
One more point to note is that the temperature of the drives are normal - well ventilated, stayed at 41C most of the time.