Getting all this kit together is a reasonably expensive business and it's very, very hard to build a PC that's as quiet and attractive as the PlayStation 3 or Apple TV, while power consumption is going to be an issue given the current economic and environmental situation.
On the other hand, a PC is always going to be more flexible than any dedicated device you might buy. Find a file that won't play? Just download the appropriate codec. Running out of storage space? Simply plug in an external HDD. If new HD TV or satellite services start up, you'll doubtless be able to buy a USB device that will allow you to enjoy them. Plus, as more movie download services come online, from the Lovefilm and iTunes services already running in the UK to future Sky services or the currently US-only Amazon Video on Demand, you can guarantee that the PC will be able to work with them. This is a major point in its favour. Plus, with the content already sitting on a system under your HDTV, you don't need to worry too much about network issues.
Still, the usual issues of size and noise mean that most PCs are still more welcome in the study or back bedroom than the living room, and why media-savvy NAS devices and home media servers are becoming more popular. What you need, then, is something to get the content from them and into your living room. Oh, blast, isn't this where we came in?
Powerful, flexible and multi-functional
Keeping content local puts a stop to network issues
Ready for future technologies and services
Potentially noisy, bulky and/or pricey