I love my home entertainment system. My current inventory is:
- 1 mac mini
- 1 nintendo wii, 4 controllers, 2 DDR dance pads
- 2 USB video game controllers for MAME OS X. I heart old school arcade.
- mtr, handbrake, front row, perian, transmission
This weekend I added parallels and windows xp to the list so I can watch movies instantly through netflix. I’ve had the best playback luck when I let the movie queue up for 15 minutes or so before watching. Otherwise it’ll sputter every now and then (and I’m on a fast, wired, cable connection).
I also purchased an Apple TV which I tried for about a week. Since it’s a closed piece of software it’s no good to me. With my mini, I download Perian and then I can watch almost any movie format in Front Row. Also, Front Row knows about the Movies folder in my home directory, so I linked to the external Drobo from the Movies folder. Now I don’t even need to go through iTunes to access my DVD collection and I can keep my DVD discs in the garage and scratch-free.

Open Apple TV Alternative
Hey Matt: If you're looking for an OPEN alternative to the Apple TV, check out the Neuros OSD -- its about as open as they come! It can browse YouTube, play media files, and unlike the Apple TV, it can actually RECORD!
-D
Of course there is Roku
I am sure you have seen it by now, but if not, there is of course the Roku which is based on embedded Linux and specifically streams Netflix.
It's pretty cool, about the size of your Mini, plays HD (480p) and quiet. I don't have one of these but I am considering it, because I do watch a lot of the old stuff on NetFlix and my MacBook does do a bit of stuttering under Parallels. I will heed your tip on letting it queue up for a bit and see if that helps.
Pat - CrashTest_