Music only HTPC / SSD only?

Not sure what software you will run but lots of folks run a small (64GB) SSD as a boot drive and a HDD for storage. Alternatively you could just pick up a hybrid drive like this and use it for boot and storage.

Digital is digital. From a sound quality perspective it won't matter what it's stored on.

Why FLAC? I have over 3k CDs ripped to Apple Lossless using iTunes for a front end. All music is piped to Apple Airport expresses over a wireless network connected to systems via an TosLink/digital connection.......up to six zones now. Control the whole thing with an iTouch and the Remote app. Got the PC set to wake on LAN command so the PC can sleep when not serving.

Oh....does video too......400 standard def DVDs and BD ripping is under way

As to SSD vs HDD for storage, my money would be on two 500 tb HDDs.....one for backup exclusively.......just in case.

Streaming music is very very easy. The bandwidth requirements are very low, even when streaming to many many different places around the home. A typical hard drive will not be stressed. Going with mechanical 2.5" drives is a way to go... they are quiet and low powered (sometimes lower than certain SSDs funnily enough). You can grab two of them and put them in a RAID1 array so that in case one drive dies, you won't have to re-rip your 1000CD collection all over again.

As for low power CPUs etc. The differences are not that large. Until we go to say ARM architectures (or future gen Atom chips that compete with ARM chips) then the power savings are minimal, especially as most of the time, the system will be idle (unless you also do some fancy stuff like using the PC to do digital crossovers and room correction etc.) A low end Core i3 CPU is a safe bet in any case. Though with the newer ivy bridge models due soon, it might pay to wait (though likely they won't be as cheap as the outgoing sandy bridge models).

Alternatively the lower end AMD APUs could also do the trick. mITX system + PCIe sound card + dual hard drives in a small quiet enclosure would be ideal if you want to stick with a PC for music serving duties. It really depends on what else the PC will be doing, e.g. e.g. if just running Foobar2k + tools to rename and add metadata and add some replaygain tags for music normalisation, then PC is the only route, otherwise you can get simpler devices for streaming music from portable drives since you will be using the AVR for DAC duties anyway.

Besides cost and all, SSD's are not a good long term storage medium anyways. Besides the finite number of read/writes you read about which shouldnt be a big concern for most people's normal use, the big thing with long term storage is the data stored degrades over time even with little to no use. I'd use a standard hard drive for sure for this application.

I use flac also, the biggest concern should be the music player you want to send the music untouched to your receiver.

My 2 cents.....

Think about a backup HDD. Music libraries take lots of time to set up right. Back up your whole library. I agree two 2.5 in drives would work great.

Software: I have a dedicated headless music PC hooked to my living room AVR , I use XBMC as the player. It works great for my purposes, as I can control everything via ANDROID remote or the browser on my desktop. (I keep my music on a separate server and rip on another PC, so I don't need a display.)

MP3TAG is awesome for cleaning up your metadata for FLAC as well as MP3.

Plan out your directory structure, I recommend;

D:\Music\Mp3\Artist - Album\tracks.mp3
D:\Music\FLAC\Artist - Album\tracks.flac

Make those directories shared on your network so you can access with other devices.

I think you will find that SSDs have a finite number of write cycles, the read cycles are not impacted the same way. I think the term for what you describe is called data-rot. In any case, I'm not sure if SSDs are susceptible to data-rot the same way that magnetic based media is - but am pretty sure it does exist. As mentioned before, SSDs are not needed for storage of music files as they do not benefit from the speed, and it is more important to focus on redundancy to avoid the time and effort it required to set up that nice collection in the first place.

If the ssd price is not a problem, go for it. Stay away from that apple proprietary software. Get an external hard drive and back up your system to it. If your SSD goes down in 5 or 10 years, you will have a backup.

really? where did you read that?
while I agree that EVERYTHING, HDD's included, have a finite amount or read/writes, a modern SSD has a phenomenally high expected read count, probably much, much higher than any HDD currently in existence...
sure, write counts may be fairly low at first glance (~10K for MLC, ~100K for SLC), but that is to a single bit, with modern wear leveling schemes, even the comparatively crappy MLC with its measly ~10K should last at least 5 to 10 years... how long is a HDD expected to last in constant use?
and even when one single bit goes 'bad' on a SSD you can still read it.... you just lose the ability to write to it... lets see a HDD do that... you really need to provide a citation for this...
all the NAND chips that everyone is currently using all claim compliance with JEDEC JESD47G(pdf)
seems the op would be pretty safe with any sort of normal usage pattern for a number of years...
of course, if the OP doesn't power up his music server device for like 5 years, yea he may wish he had made a backup... maybe... or he may be fine...
but seriously, if the OP is not going to actually use his 'music box' why even bother building it in the first place? I don't think a HDD will help with that...

If you're building a music PC, you might be interested in this: http://www.computeraudiophile.com/content/405-computer-audiophile-pocket-server-caps-v20/

I've helped to build or built a couple of these now but with slightly different specs from the article:

ecosmartpc Realan E-i7 case
ASRock AD2700-ITX motherboard
Crucial 2x2GB SO-DIMM DDR3 1066 kit

and then either a Crucial m4 128GB or Samsung 830 128GB SSD, depending on what's on sale. Depending on the size of your music collection, a 256GB or 512GB SSD might be a good investment to cache all the music locally. If not, a 64GB SSD would suffice but with prices how they've been, the difference between 64GB and 128GB was $10-$20 so very much worth the larger size.

A couple of customers opted for the SOtM tX-USB audiophile card that's shown in the article but the HDMI on the ASRock board would be fine if you're just running it through an AVR. One of the reasons for choosing that board was it's passively cooled, has an HDMI output and a PCI slot for the SOtM card.

It ends up being a pretty inexpensive build that's completely passive -- great for a music PC.