VM/ETC posted awhile back an excellent article about a free iSCSI SAN VM appliance that you can download from Xtravirt, which I just found today. It doesn’t sound like it can scale beyond using storage from 2 ESX servers, but for a really small environment or a home lab, it might do the trick.
http://vmetc.com/2008/05/23/xtravirt-xvs-creates-a-free-san-out-of-local-esx-vmfs/ 

This post is similar to these other options we’ve mentioned for iSCSI SAN VM appliances:
http://lewanps.wordpress.com/2009/01/08/dr-in-a-box/

Enjoy!