I have an extreme ( less than a year old) and am looking into a tc as a wireless hdd for backups using time machine. Is it worth spending the 499 or is there a cheaper option that will work wirelessly?
Do you really have that much to back up? The premium to go from 2TB to 3TB just seems clearly not worth it to me. I'd save the $200 with a thought to putting it to use replacing the TC in 2 years with something better.
There are much cheaper solutions but if I had that much data, I would probably not try to back up wirelesses.
There's really no point in going with a TC. You'd be better off getting a USB HDD and connecting it to your AEBS for Time Machine backups. Or you could get a NAS that will give you much more functionality.
If you do go with the NAS however, make sure that it supports Time Machine backups, otherwise it may be a bit more difficult to back up your Mac to it.
Some people have figured out how to attach an external USB to the Extremes to get the same wireless backup capability. I don't remember the details, but I'm sure if you google around you'll find some info.