XP MCE is not too bad, but not as pretty as Vista, but Vista has some problems with the guide not been saved. There are hot fixes for it, I am sure they have fixed it with the sp1. So Vista might not be a bad choice. But if you get vista make sure your graphics card is semi decent, especially if you are going to use the glass theme. I did like the media side of Vista more then XP mce, there are more plugins for it and it looks a lot better.
But I find the ps3 pretty good, games are great, the interface is really nice, you have a semi decent browser, the flash plugin is out of date, but that is because it is build on linux. The ps3 is way better then the xbox even just for the media components, having a blueray player is a big plus now that HD is going to die. The only thing the ps3 can't do over Vista, is the tuner, that is media side of it. Of course a normal computer has added functions. But there are talks of a tuner for the ps3.
Sony talks up PS3 TV tuner | Register Hardware
Once you get a ps3 you will love it, but I found that I also need a computer to fill my other needs, torrents being one. The ps3 supports an external hard drive via USB, so it also supports large storage. Also everything just works on the ps3, if you have another computer on a network you can stream media via a uPNP server. Through media player 11, it is easy as clicking on library, then media sharing, allow access on our firewall. Then search for media servers on our ps3. Works perfectly, I am using mediatomb on a linux computer which works just as well. Also the ps3 looks great and for 2600, plus 2500 for which is what it cost me for another pc, 5100 in total you can have both.
Also you can get a mac mini and use xhub which looks good. They are very small and are more stable then windows, you can also stream media via a uPNP to a ps3. You just use a usb tuner, but you have to a special mac one, not that expensive.
If you want to build a cheap pc I can give you the list of components I used.