Have an HTPC running xbox media centre - plays everything, they are always updating the software daily.
You can customize it and show off glorious HD to your buddies making them jealous like I did

that program looks awesome, much better than Windows Media Centre.
Also convenient for Music collection and picture collection.
Only thing's to consider:
HTPC can be difficult to setup if you are not into computers
Must have the right hardware setup
Media players are plug and play and much easier to setup but do not have the functionality of an HTPC.
My setup Dual Core
4GB ram
Normal case 350w power supply
Wirelsss keyboard and mouse
Windows 7
HD 4850 radeon
Asus HD motherboard
Single cable from hd radeon to Sony Amp
Single cable from Sony amp to LCD TV (total 2 hdmi cables for 5.1 sound and video)
Also play games on my PC so a plus as well.
If you not into having "bling" pretty HD functionality and don't want a noisy PC in your lounge then go the Media centre route - It's easier.
My garage is behind the wall my TV's stuck to and that's where I placed my noisy HTPC (on a shelf), so I cant complain about fan noise - don't hear a thing and everyone's wonders where the hell everything is hidden.