There is, of course, one final choice: instead of buying something to bridge the gap between your PC and home entertainment setup, why not simply bring a PC into your home entertainment setup. In a smaller living room or flat you could ditch your old TV and buy a specific, media-focused all-in-one like Sony's VAIO VGC-LV1S, or in a larger space you could opt for a small form factor PC with the power needed to run HD media apps - the Asus Nova Lite PX24 (around £375) springs to mind.
If you have a higher budget to work with, then Sony's VAIO VGX-TP3ZB has a lot going for it. Sony's consumer electronics background shows through in the neat and surprisingly small round system box, the wireless keyboard with integrated mouse pad and the sort of features and connectivity that makes it feel more like part of a home A/V system than your average PC, from the Blu-ray drive to the built-in dual TV tuner to the excellent remote control to the optical audio output and HDMI port. Perhaps the biggest compliment I can pay it is that other members of the family didn't realise it was a PC when I first plugged it into the projector to watch a movie - it was too neat, too gorgeous, too near-as-damnit silent. Yet with a Core 2 Duo T8100 and a GeForce 8400M GT graphics card you could even use it to play the odd game if you weren't too ambitious. Want to switch from watching Hellboy 2 in gorgeous 1080p to playing World of Warcraft on a single system? This will do it, and you can't say that for a console or the Apple TV. The only sticking point? The not totally unreasonable £900 price tag.
If that's too rich for you, you can always save cash by building your own system. Dedicated media centre cases are available, you can plumb in your own low-noise cooling system, throw in an HDMI-sporting graphics card and you can add or upgrade hard disk drives or throw in a Blu-ray drive as you see fit. Add Windows Vista Home Premium and a dual-tuner TV card and your PC is a media player, web browser, games machine and PVR all in one.