File servers, as a general rule, will have more processing power than the average desktop, and will be optimized to perform the task required of them - redundant power supplies, redundant disk, redundant memory, multiple NICs that can be 'teamed' to provide either redundancy or increased throughput (or both) - you may notice, there is a focus on redundancy, or the flip side, availability - if a desktop fails, that's usually a single user affected, if a file server fails, it's an entire office.
Not all of these features are found on all file servers, in fact, on an entry level server, you might find only redundant disks (which you can do with the DNS-323), but, even the least expensive entry level server will have ECC memory (which provides a greater level of reliability) and will have firmware that allows a greater level of management, again optimized for the role it is required to play.
The DNS-323 on the other hand is a consumer NAS, with the focus on price not performance, throughput, even with a gigabit network, is a dismal 25 Mbyte/sec at best (in comparison a $500 entry level IBM xSeries is capable of over 100 Mbyte/sec), and as the number of simultaneous writes occurs, that 25 Mbyte/sec is going to plummet all the way down to less than 5Mbyte/sec (that's the degradation I'm referring to)
When I bought the DNS-323 I have (back in 2006), the intended role was to act as a file server for a small business client of mine, actually a single user with half a dozen systems, each performing a specialized task (a role that it has never filled because of a lack of a proper back up strategy) - ironically, it sits in my network, backing up my IBM xSeries servers.
Is your implementation a bad idea?
I don't know - it seems to be working for you - but let me ask, how do you back it up - and no RAID1 is not a backup - my IBM has RAID5 and that gets backed up to a DNS-323 running RAID1.
We, on this forum, have begged & pleaded with D-Link to add a back up function, to an external USB hard drive, but never got anywhere with it, it's not a particularly challenging task, at one point I had read/write access to an external USB disk, I just couldn't be bothered to build a web front end to manage the back ups.