You can plug any USB hard drive into a Time Capsule and expand the available disk space of the Time Capsule that way. This is then accessible as usual as a Network Attached Storage device for your Mac backups or whatever, and you can then even directly backup wirelessly to that external drive connected to the Time capsule using Time Machine.
I had no idea this was possible. All the more reason not to go for the 3GB Time Capsule instead of the 2GB model. Although in theory an Airport Extreme with an external drive should accomplish the same thing as a Time Capsule, in practice this appears to be less relaible and is not supported by Apple.