For high definition TV, I believe you need the latest DirectTV HDTV receiver and service, but I am not too familiar with this. However, you don't need an HTPC for this - an HD satellite receiver should connect directly to the HDTV.
Many people are using shuttle PC's as HTPC's. The only drawback is the space/expandability of a small box. You need to make sure it will support all the cards you need, and that the cards will fit into the tight space. Otherwise I think they make good HTPC's.
The main strengths of the HTPC when used in conjunction with an HDTV is that it makes a great progressive DVD player, and it will scale the image nicely to HDTV resolutions (like 1080i).
Most people output the sound from the HTPC diectly to their audio receiver using a digital connection (SPDIF:coax/optical). The receiver performs all the decoding of the digital stream, and the d/a conversion and amplification. This setup usually gives the best results. PC's don't deal with analogue sound well, unless you are prepared to spend a lot of money on high-end PC audio components (as a general rule).
For PVR/VCR type functionality, a DirectTV DVR/Tivo device might be a better solution. The DirectTivo captures the digital broadcast directly to an internal hard disk, and so the playback quality is very good. The Tivo user interface is also very refined and popular too.
The HTPC is also quite good at scaling analog TV sources. For this you need a TV capture card, and some software like "DScaler". This is something that can be done relatively cheaply. The quality will almost always be inferior to DVD playback, but good results can be achieved using digital cable/satellite TV sources. There are a range of TV capture cards to choose from. The majority will capture traditional antenna/RF (coax cable) TV, composite video (line-input), and s-video sources. Some higher end cards also support analog component capture. The quality differs significantly depending on the type of video source - RF being the weakest, and component sources giving the best results. The price of the different cards reflect this. (eg. if you have a satellite box with an s-video connector, use this to connect to the HTPC instead of the composite video connector, for best results). The picture quality is also highly dependent on teh quality of the original signal - digital satellite should be good, analog via an antenna or VCR will be bad, etc. Garbage in, garbage out
Other uses for an HTPC include using it as a media jukebox (eg. playing your CD collection from the hard drive), as a games machine, home automation, and internet surfing on the big screen! But there are many uses really.
Mike.
