The RAID controller or its firmware (or both) in the Buffalo DS Duo HD-WIU2 (2 x 250GB) does NOT support auto-resize if a bigger HD is inserted (and the 2nd bigger HD in a consecutive step). Here's how I got bigger HDs working in it in RAID1 mode anyway:
1) disconnected Buffalo, opened case, took both HDs out, connected one via SATA USB adapter and made sure the data was readable even outside of RAID structure
2) put new bigger HDs into Buffalo case, connected, fired up. Ran RAID Setup Utility AS ADMIN (Win7), set mode to normal. Verified desired effect in Windows Disk Management, unmounted Buffalo, turned off
3) Turned Buffalo back on, restarted RAID Setup Utility, re-enabled RAID1, again verified desired effect in Windows Disk Management
4) cloned old HD (in SATA-USB case) to new bigger RAID in Buffalo (with Paragon Hard Disk Manager, but other tools like R-Drive Image or the ones from Acronis or even Norton Ghost should work, too)
So now I have 465GB in RAID1 mode available in my (rather old) HD-WIU2 :)