This is what I would recommend.
HD decoding can be quite CPU intensive, but this can be reduced significantly with the right GPU/decoder combination. Nvidia's Purevideo decoder is great. Combine the software with a compatible GPU and it will take a huge amount of load off the CPU. The 6600GT is probably the cheapest GPU with full HD acceleration support. You might also want to look at the 6800GS, 7300GS, and 7800GS and see how they all compare and what you want to spend. I know all of those cards support full HD acceleration with Pure Video. This combination will also allow you to easily enjoy WMV HD movies which look incredible.
I would say 512mb RAM minimum, 1g would be better.
If you get a good GPU and the Pure Video software like I mentioned, you should be able to get away with a moderate CPU. If your putting it in a small form factor, you might want to consider a P-M, or if you can hold off a bit, get a Core Duo when mobo's are available. Going with a mobile CPU will make cooling much easier in a small form factor case.
As far as recording and streaming music, just general multitasking, that is when more RAM and a better CPU become more needed. Something like an X2 CPU might also be a good choice, but they can get a little toasty as well, but still far cooler than the P-D's. If you find yourself getting a P-D, get a 9xx series as they run much cooler than the 8xx series.
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DS3 | E6400 - 3.2GHz 24/7 | 2GB OCZ PLat. PC6400 | 6800GT | Zippy 460W
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