Why Windows Media Centre? Take a look at MythTV as a major cost saving and Steam now runs well on Linux, potentially better than on Windows and compatibility will improve as the Steam box console is Linux based.
Any ideas on hardware that you want? If you want to play games then what kind of games? If you need a high end graphics card then this greatly changes the options for a media PC.
I've thought about it, and decided that Windows Media Center has the best UI for what we want to do. The hardware can be relatively low end - I won't be doing any actual gaming on the system. Rather, I'll be streaming the game from Steam on my gaming rig once the service is released.