HDMI is tons better than VGA. Most TVs don't even support HD through a VGA connection.
Motherboard: Newegg.com - GIGABYTE GA-MA78GM-S2H AM2+/AM2 AMD 780G HDMI Micro ATX AMD Motherboard - AMD Motherboards
*note* This one is special because of the way it handles HD audio, great for an all around DVD/Downloaded content solution
CPU: Newegg.com - AMD Athlon X2 BE-2350 Brisbane 2.1GHz 2 x 512KB L2 Cache Socket AM2 45W Dual-Core Processor - CPUs / Processors
*Note* 45W processor, easily passively cooled, even when overclocked.
Tuner: Newegg.com - SiliconDust HD Homerun Dual Network HDTV ATSC/QAM Tuner IPC-HDHOMERUN Ethernet Interface - TV Tuners & Video Devices
*Note* Make sure to research this product, it can do anything you throw at it but requires a little bit of computer knowledge and patience to set it up with multiple types of TV (i.e. OTA with QAM and SD TV all at once)
This is just for a low power system. If you're looking for a lot more performance and don't mind some noise, go with this processor:
Newegg.com - AMD Phenom 9850 BLACK EDITION 2.5GHz 4 x 512KB L2 Cache 2MB L3 Cache Socket AM2+ 125W Quad-Core Processor - CPUs / Processors
It will run WAY hotter so be prepared to actively cool it.
As much as I love Intel for most applications, AMD has the HTPC game under control with low power solutions that tear through HD media.
Edit - My Build (Newegg prices YMMV)
$773.94 - $55 (rebates) = 718.94
Seagate Barracuda 7200.11 ST3750330AS 750GB 7200 RPM SATA 3.0Gb/s Hard Drive - OEM
GIGABYTE GA-MA78GM-S2H AM2+/AM2 AMD 780G HDMI Micro ATX AMD Motherboard - Retail
SiliconDust HD Homerun Dual Network HDTV ATSC/QAM Tuner IPC-HDHOMERUN Ethernet Interface - Retail
LITE-ON Black SATA Blu-ray DVD-ROM Drive Model DH-4O1S-11 - OEM
CORSAIR CMPSU-450VX ATX12V V2.2 450W Power Supply - Retail
CORSAIR XMS2 2GB (2 x 1GB) 240-Pin DDR2 SDRAM DDR2 800 (PC2 6400) Dual Channel Kit Desktop Memory Model TWIN2X2048-6400C4 - Retail
AMD Athlon X2 BE-2350 Brisbane 2.1GHz Socket AM2 45W Dual-Core Processor Model ADH2350DOBOX - Retail
The PSU is beefy enough to handle a second card later if you decide you'd like to add a 3870 or 3850 for hybrid Xfire.