I have an HTPC in my media room, mostly for playing the songs I have on my big RAID array in my office PC. evildick is correct. The key is getting a nice case with VERY quiet fans. I spent about $100 on this case
http://directron.com/vb8000bns.html
Very cool LED lights :-) (of course, the purists would say that lights of any kind are a distraction - but I'm a geek...I like pretty blinky lights
I then replaced all the fans on it with even quieter fans from
http://www.endpcnoise.com/. I also replaced the CPU fan with a quiet one. You can't skimp on the fans. Of course, if you really want to do it right, go with a water cooled system.
The actual guts are just a P4 2.8 with a good Hauppauge video card and a good SoundBlaster sound card.
It's not HD quality, but like I said, I just use it to listen to mp3's.
Here are some pics of my media room for anyone that cares :-)
http://lbbv.com/theater-room/index.html