Both iSCSI and NAS are both targeting providing storage access over Ethernet using IP. In this case, they both...
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use TCP/IP. The difference is that iSCSI is providing block level access to data while NAS provides file level access. Databases typically use block access for performance reasons (there are many issues here which I won't go into).
The block level access for databases is done with direct attached for Fibre Channel attached SAN storage today to give the performance required in some environments. Both NAS and iSCSI are trying to address the transaction processing market by improving performance. This is being attacked with TCP/IP accelerators (special bus adapters or NIC cards) and in the case of iSCSI, with some of the iSCSI required processing offloaded. As usual, these require new device drivers. You are essentially correct in that iSCSI and NAS are both targeting the same market. The argument that they are less cost than other solutions is probably not true at this point.
The bottom line is that you must understand your requirements for performance, administration, security, support, etc. and make a decision based on that and not on anybody's simplistic rule-of-thumb. One size does not fit all and your requirements may dictate a specific solution.
Evaluator Group, Inc.
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