I bought a couple of Acer Revo 1600's a couple of years back. These were the original Intel Atom / NVIDIA ION nettops. At the time they came with Windows XP, 1GB of RAM, 160GB HD, gigabit ethernet, and a keyboard and mouse, all for $200. This box probably had the biggest bang for the buck, especially considering the inclusion of the OS. After much experimentation with XBMC under XP and Linux, I later decided to upgrade the OS to Windows 7 and also increased the RAM to 2GB. I've been using this quite happily as an XBMC streamer, and am now pretty much converted over to using Plex (due to its easy central-metadata storage on my main server in another room and its support for transcoding to my iOS devices).
The room that has this Revo (my living room / home theater) also has an XBox 360 that I use as an extender for live TV / DVR. My main server is an HP tower with Intel i7 that I got as a refurb online (under $600, if I remember correctly). It lives in my bedroom but is surprisingly quiet (my wife is super-sensitive to these things and has never complained). I have an HDHomeRun Prime 3-tuner (cablecard) box, and a 2nd one still in the box that I haven't gotten around to hooking up. I have Comcast and no premium channels, so I'm fortunate that all my channels are copy-freely, which opens up some other options (more on that in a bit).
At one point I did experiment with WMC7 on the Revo, and just yesterday I actually dusted it off for that purpose to see if I could get it working acceptably. My mindset recently has been that I'd love to have a single UI for everything, or perhaps even just a single hardware device that might need to jump around between apps, so the idea of using WMC combined with Plex and some other WMC or Plex plug-ins/channels for Netflix, Hulu+, and whatever else, got me into the tinkering mode again yesterday.
Well, I don't know if I might have crudded up the display drivers at some point in the past with various codec packs (back when XBMC was still going through some growing pains), but I found the WMC experience to be really, really bad. The WMC GUI was sluggish compared to my XBox, but I could possibly live with that. What wasn't acceptable was that the picture would stutter a lot. I've read some of the same things you have online, with other people reporting success, so there's a part of me that's contemplating doing a fresh Win 7 reinstall just to see if some old video driver garbage might be the culprit. But I also recently bought a refurb 2012 base-model Mac Mini and I'm probably going to make that my new living room box instead. If I do the Revo Win 7 reinstall, I'll let you know what happens. Who knows, maybe you'll be interested in buying mine.
A couple of other ideas...If all you really want/need is a 2-tuner DVR that's under $500, you might want to consider buying someone's used TiVo HD with Lifetime service. I think you can find those for under $300 on eBay. In fact, I used to use TiVo and got an email offer to get mine re-activated with Lifetime service for just $50, but I was out of town and missed the deal. I may still call them to see if I can swing it, if for no other reason than to sell it on eBay or use it in my daughter's room (she has an XBox 360 as well, but I can't get ethernet to her room easily so she clogs up my WiFi bandwidth when she wants to watch TV on that - fortunately she's been more interested in watching Netflix and Hulu+ on her Apple TV (gen 2) lately). Again, if I *do* get that TiVo deal, maybe you'll be interested in buying mine. Or, you could get one of the newer 2-tuner TiVo Premiere models for $100 plus $15/month for the service. Lower up-front cost and it "just plain works", but more expensive longer-term than building your own PC. TiVo Lifetime service costs a hefty $500.
So the other thing I played around with yesterday was the Netflix and Hulu services on my HP Tower (i7 CPU) in my bedroom. I have an Apple TV (gen 2) in that room, too, and that's been the preferred device for Netflix and Hulu, but as I mentioned, I kind of wish I could have one single device for everything and not have to change TV inputs. Well, Netflix seemed pretty good and there's already an icon for it in the WMC menu. Video quality looked fine and the remote operated things as I would expect/want it to. Hulu was a mess, though. I installed Hulu Desktop and tried it out. First try: I selected an episode of Revenge (a show my wife is into and was in our "Favorites" list). The Hulu app ended up going into what seemed to be a non-stop loop of commercials, and then finally started playing...the Jimmy Fallon show. At that point it also wasn't responding to my remote. I had to get up and kill the app and restart it. Next try worked, but I still was having remote troubles. Finally closed it down altogether. I also had to use a different hack I found online to get it to add an icon for Hulu in the WMC menu, but that didn't properly set the focus back on WMC when I exited out of Hulu. As for Amazon Instant Video: I don't think they have a standalone app that can happily live alongside WMC. I think you have to launch it from a web browser. That doesn't sound wife-friendly. Moral of the story: My experience has been that these online services work much better on other consumer electronics-oriented boxes (the ATV experience is excellent).
Do you already have an XBox 360? If you can get an ethernet cable to it from wherever you might already have (or be willing to store) a desktop computer, you could also go that route. Going that route, you might not mind as much if the desktop PC is a bit bigger and louder. The XBox 360 "just plain works" as a Windows Media Center extender. The newer "slim" models are much quieter than the old ones, but they're still louder than they should be. There's a fan inside the power brick, but the power cord is long enough that you might be able to hide the power brick behind something to quiet it down further. I believe there's also a fan inside the XBox 360 itself, but that one seems to be nearly silent.
Quite honestly, if all you really need is a 2-tuner DVR, the used TiVo HD w/Lifetime service might be something you should seriously consider.
I'd much rather watch a great movie in B&W at 240 lines of resolution than a lousy movie in 1080p with lossless audio.
A couple of other ideas...If all you really want/need is a 2-tuner DVR that's under $500, you might want to consider buying someone's used TiVo HD with Lifetime service. I think you can find those for under $300 on eBay....
Just so people know, they can get a brand new TiVo Premiere with the lifetime fee for only $480.
The unit can currently be found for $80 (w/no shipping) on eBay right now.
When you go to order lifetime on TiVo.com, enter in the code PLSR, for $100 off (someone PM'd me earlier that they just used it, and it worked).
But $99 premiere plus $400 for lifetime might be worth it for a 2 tuner brand new unit...
And this shows my recording three streams while watching a show I had recorded on the same SSD I'm using in my Foxconn.
This WMC is odd as it does things in the background that use CPU... often you have to wait until it's finished before you can watch stuff smoothly. But simple playback/recording isn't all too hard on it. Oh, I'm connected to a 1280x720 via DVI & stereo cable if that matters and I do not do Hulu, Netflix or any of that streaming. I can stream any shows recorded on my HTPC which has additional OTA tuners and analog tuners for my cable input.
One other thought: mine is the AT-3500 E-350 at 1.6GHz while yours is the Atom-based unit so I cant say exactly how they compare when they're different hardware. Point being it's not JUST the clock speed to compare.
They are roughly the same and actually the D2700 Atom is a little weaker.
"Sluggish" is not something that is acceptable to me when using completely new hardware especially at that price point (I don't care how small and cute it looks)
To each his own though. Good luck with your build OP.
I have considered placing this AT 3500 with another TV in my house since not having a bunch o' cable STBs around leaves them sorta useless and the Nettop does FINE in that capacity as occasional use!
I have since "trickled it down" to my parents and it seems to play Jeopardy, and Matlock just fine. They are not complaining, and they are 84 and 75 years old! They don't know it is a PC, either...
It even played Hulu just fine. But, don't try and run show analyzer, nor multiple TV's off it, which does not sound like OP is going to do anyway.
But assassin and others have rightly said that there's much better ways to spend the money on a new build, so there is little point to getting an Atom now for your main HTPC.
I have an AMD 5600 (that's right 5+ years old) with a GT430 and WinTV HVR 2250 running XBMC (frodo) in native 1080p. Everything is hardware accelerated and I can watch 1080p content without a dropped frame smooth as can be in native 24p. During the olympics I recorded 2 HD OTA feeds (I don't have cable) for hours on end without issue. Play back is also accelerated and "just works".
Here is comparison in specs on the CPU (I have one power hungry relic)
I've been doing this about 12 years and in my opinion your best experience will be a Tivo but your most flexible experience will be with an HTPC.
The only good Cedar Trail board I've seen integrated a Nvidia GT610 into it which gets around all the driver issues. It's decent for Windows and terrific for OpenELEC.
Otherwise, stay away -- not simply because it's Atom but because of the GPU issues.
Celeron mobile 847 motherboards are a much better choice and around the same price.