What i did for my HTPC is got ahold of an old Dell Optiplex 260... it's got decent specs, especially for just using it as a HTPC, it's fairly small, and it's really quiet (you can only hear the fan if you stick your ear to the back of the case. Added in a remote control, wireless keyboard and mouse, and I was all set...
specs...
Windows XP Media Center 2005
2GHz P4
256MB RAM (small, but it still gets the job done with some tweaking...)
20GB hard drive (although I have another computer set up as a file server...)