It's best practice to keep your home folders on AFP due to performance advantages and full permissions compatibility given by AFP. I've run into all sorts of issues with SMB and permissions. iPhoto will have no worries with its library on an AFP volume.
What speed is your network and what is the size of the pipe at the server end? Serving media over a network is fine as long as you got the backbone for it. We do it with our Avid network and that runs over a 100mbit albeit our server is 1gig and the contention is only 10:1. Also your share must exceed the limits of the network pipe in terms of output.
