Hey,
A NAS drive works off the network, most NAS drives don't have a USB connection they have a Ethernet connection and you will need the Ethernet connection on your LX2 for your line so its connected directly to your router, the LX2 can't detect NAS drives on a network so you can do it that way.
If your not doing much recording or watching the recording quickly after and then deleting them than a 16GB USB drive will be fine, it will store your EPG, box data etc and will do just fine.
If you plan to record alot, watch the stuff later or even save stuff for a later day or use the timeshift feature then get a external HDD but it will have to have its own power connector or be plugged into a powered USB hub as the LX2 wont supply the HDD with the power it needs. Something like a 250-500gb will store hours upon hours of recordings. If your using a HDD then you wont need the USB too, one or the other is fine.
I have a 320gb slim external HDD (Pocket sized) connected to a powered USB hub and it does the job perfect, the drive cost me about £25 and the powered USB hub cost me £5 all off eBay, delivered next day