A SAN means you get more storage for a given number of disks.
E.g. if you have 2 1G disks mirrored in 10 hosts, that means you can store roughly 1G of images you can store.
OTOH if you have the same 20 1G disks in a mirrored SAN you can store roughly 10G of images.
Even better though - you have those 20 disks in two san enclosures mirrored over 2 sites e.g. 10 disk in site A 10 disk in site B, and A and B are mirrors then you still get your 10G of storage but increase your data's resilience.
I.e. site A can go down and you can still be serving data from site B. (actually you'd probably have 9G, i.e. 9 active disks and have a hot spare disk in each san enclosure).
If you also spread your servers out, 5 at each site, you also increase your entire site's resilience. If site A goes down, you'll lose 5 of your servers but the other 5 will still be serving and you'll still have access to all or your data.
You also remove the need to sync the data on the 10 servers with a definitive src of images.
Depending on how you plan to backup, backups may be easier with SAN too as you'll only need to do one data backup.
The only reason I can see for losing the SAN is if you can't afford it and/or your data requirements are small and you don't anticipate they'll grow a great deal.
The more data you have the more your savings should be with the SAN approach as the SAN enclosures get cheaper per G the more trays/disks you hang from them.
If you go iSCSI make sure you have a dedicated VLAN and ideally dedicated switches for your iSCSI network.