The answer is a mix of both on a 1G network. It doesn't take much to digitize video (or edit it for that matter). You want the monster system for encoding to multiple web ready formats.
We've got 3 average systems digitizing, then our main editor running Premiere is 3GHz with 2G RAM, 500GB RAID ARRAY plus 16 300GB Maxtor Firewire drives.
Our latest machine is dual Xeon 3.4GHz w/ 2GB RAM exclusively for running ProEncoder batches. The first thing we did was run a batch with the performance window open to watch both CPU's maxed out! If you've got the coin this is the way to go for encoding.
If our production schedule allows it, we welcome Seattle wm's to stop by and give our systems a spin with their content.
L8R SK8R,
SixNine
SoulCash.com