I just built myself an HTPC. For starters, I wanted something small. My setup is about the size of a shoebox and nearly silent. Went with mini-itx motherboard with s775 and nvidia9300 chipset (essentially ION). I found that celeron 430 is fine for bluray playback but it's not enough to playback hidef H264/quicktime, nor Hulu HD. I moved up to a E3300 and I consider that to be the absolute minimum. CPU is still at about 80% on each core when playing a 720P quicktime MKV file. about 60% playing hulu HD clip.
I was tempted to try out the dual core atom but given the problems with the celeron, I'm glad I went to a full on 775 chip. and some reviews noted the E3300's low actual power consumption (as opposed to its rated 65W TDP).
I used 2GB of generic RAM, a full sized bluray combo in an Apex MI-008 case. Note there's not much clearance for a PSU in this case, so I ended up buying a Silverstone NT007 HSF. the stock HSF for E3300 should probably fit though. And I have an Antec Veris basic which gives me remote turn on, and basic DVD controls on a small remote control.
The motherboard I used was called zotac 9300-ITX Wifi meaning it had an 802.11G on the motherboard. it's actually a daughter card but it doesn't use up a slot. I could add a PCI-E graphics card if I want but I don't have a need.
Make a note that ATI cards can only play 2ch audio over HDMI while Nividia can play 8ch audio. Or maybe I have that reversed. I don't care but you might want to research that issue.
by buying used/****ing, I kept the total build under $300.