Nagastone is the main block that makes up the wall surrounding the Naga Courtyard. It has about the same minability of a normal stone brick. They can (and probably will) be broken by the Naga, so don't try to use them for protection.
Nagastone has an interesting behavior. If placed next to another Nagastone it will position the block to make a snake. The Naga head brick is not required, but is obtainable the same way you get the nagastone.