Sorry for the late reporting!
I was actually already using a shared iTunes Library when I was using the HDD on the USB port of the router. But the performance was not that good. Plus I was stuck to iTunes on my laptops. Plus, it did not support any TV or other devices without iTunes.
At times, iTunes would fail to connect to the shared library and so other issues.
I looked for something good for the Pi and found miniDLNA. Read through the documentation and thought it was good for me. The set up was quite good. If you wish to do a similar set up, you may look at this: http://bbrks.me/rpi-minidlna-media-server/
The installation was quick and without any hiccup. I did the configuratios as instructed. After sometime, I could see the status on the integrated website for miniDLNA that sufficient media files has been added to the library. I switched on the media player and looked for the remote media server. Voila! I could use it without any issue.
A small hiccup that I felt later was that if I add additional files to the folder that are being watched by the library, the files are not added. I need to restart the indexing again to achieve that. This is surely not the way I wanted. I looked for solutions and found this that solved my problem: http://www.raspberrypi.org/forums/viewtopic.php?t=16352
So happy streaming!!