I used to fancy having my video stored like this, clearing the shelves of my old DVDs, and having the big choice of films pop up in my projector screen, but the more I've thought about it the less need there seems to be.
With services like LoveFilm renting is cheap and easy, in my case when thinking about it there's a very limited number of films I would want to buy to re-watch on anything like a regular basis, and the amount of hard drive storage needed to for a resonable amount of BluRays is not that cheap. I think I'm going to consign the DVDs I don't watch much to storage, have a few on the shelves, and forget the ripping.
Music's a totally different matter, and I've got a Sonos which is great.
However, if you've got a PC I think AnyDVD HD will rip BluRays and DVDs to ISO, and I think there are plenty of programs that will make them into an MKV file, with no loss in quality.
Cheaper GeForce 9400M computers will play them with the right software and configuration, (look out for the HD audio support), but there are players that are easier and probably better quality like the Dune BD, or media players such as some from Iomega or ACRyan might be worth a look, (but the media players seem to need your amp to decode the HD audio).
Some of the recent Samsung BluRay decks will play MKV files from USB, (not sure about over the network), and can read USB devices formatted in NTFS, (whcih allows the bigger file sizes required; FAT32 won't cut it really).
So quite a few options, but as stated technically illegal, and at the end of the day I'm not sure it's that worthwhile.