I admire your fortitude - I'd have been a bit upset at losing 400Gb knowing how much ripping effort that entails. Having said that I did invest a lot of time recently re-ripping all my collection to ensure they were in the best possible condition; sort of an investment for the future. Which sounds where you are.
Firstly have a look at the article by Chris Connaker on Computer Audiophile abour disc ripping - it's long and takes a bit of reading but is well worth it.
In terms of which format there are two considerations, sound quality and what music player you use. On the former it should definitely be lossless, which means WAV, AIFF, FLAC or ALAC, the latter two being losslessly compressed. If you're using iTunes (as I do) I'd go with ALAC; it takes up less space than WAV or AIFF, and iTunes doesn't do FLAC natively. Some will argue there are differences in sound quality between these four options; I can't tell any, and I've evaluated it to satisfy myself. Bear in mind you can always convert between formats using something like dbPoweramp (which is good for ripping as well, you might want to consider it - not too dear at all).
I use a Synology NAS, which seems popular in this community, as does QNAP. I'd go for 2Tb drives as you get through storage very quickly and they are only about £20 more than 1tb ones. Also bear in mind if half of your 400gb is made up of MP3 rips then that half will take about 3 times as much space in Apple Lossless. (ALAC CD = 300mb, 256k MP3 CD = 100mb, approx). Sounds like you need 800gb already (even if the assumptions are wrong you get the point)
So two drives for the NAS and at least one for backup. I'd get two and have an offsite backup; this would still total under £500 and give you very resilient data storage. My Synology handles all the backup automatically, which is really handy.
Hope that helps, I'll leave others to argue over which hi-fi you should get!