I have been having some frustrations with my Raspberry Pi so here is an update of some of my experiences and a link which may interest those thinking of using the Pi as an HTPC
http://forum.xbmc.org/showthread.php?tid=152339 which I think wraps the Media Centre possibilities up very well and no doubt answers many of your questions too.
Meanwhile I still think the Pi is amazing for the price and with XBMC (Raspbmc version) installed it is a very cheap way of upgrading your TV to a pseudo-smart TV using many of XBMC's available video add-ons. My experiences with the Pi leads me to say
(along with many others online) that the Pi is not particularly robust operationally because of the following operating obligations.
You need a rock steady power supply at all times capable of supplying 5 volts at - at least 700Ma just to simply power the Pi up in the first place let alone do anything demanding. A minimum of 1.00 amp power unit is stated by Pi as necessary along with a warning that many USB
<insert country of origin here> chargers claiming to be rated at 1.00 amp or higher, frequently are not in reality. So the advice here is don't skimp on the choice of power supply to your Pi. It is claimed that most freezing and lock-ups which occur on the Pi are usually caused by an insufficient or unstable power source.
My own experience and also that of others quoted online is that the Pi is fussy about its SD card types - however there are contradictory arguments on various Pi orientated web sites which state that going for the very best, very fastest card is the right way to go where-as some folk state no performance gains seen between a class 4 bog standard SD card and a top notch class 10 card?
In my own case I did experience a lot of problems with my collection of SD cards, finding that I had only one which would boot the Pi - however, later when I had to re-install Raspbmc following a card-scrambling crash/freeze - forced power-down, I couldn't even get that card to work? I discovered that by downloading the necessaries afresh and re-flashing the card with this fresh download that all my cards now suddenly seem compatible .... so I can only assume I used a corrupted download in the first place.
I have moved on slightly technically by installing Raspbmc directly onto a USB memory stick - you still require an SD card plugged in to the Pi as well to direct the booting process to the USB drive but the performance gains - and I have to say so far - stability, seem to be well worth it.
If you have ever used XBMC yourself you will know that it is undoubtedly the very best open source, cross-platform Media Centre available, and this remains true with the Raspbmc version too - the usability problems are more let-downs and disappointments of the Pi itself during the navigation processes which begin to show the weaknesses of the old ARM processor used to construct the current 512-Ram model.
This statement is both true and unfair as we tend to expect
(or at least want) desktop PC performance from what is in reality little more than a child's toy.
My biggest problem seems to be that my video collection is just too large - so I thought to myself....what do you do with a physical collection that is too large.... you split it. Unfortunately this is not quite as easy as one might think as if you want to be able to find all your movies using the movies tab in XBMC, then even if you split the path locations even down to say 26 alphabetical folders, the XBMC interface still scrapes them all back into one location.
In practice I have found that up to about 300 - 720p films is about as much as the Arm processor can cope with on a Pi and still be usably bearable
(at least for me - others may disagree) which rather defeats the object
(well in my instance anyway). However, it is very versatile in other areas such as the video add-ons I mentioned earlier.
I have found that add-ons like NASCAR, Classic Movies, and the like all stream quite acceptably even if the quality of some of the 1950's original Classic Movies films leaves much to be desired on the eye. I shall keep my set up which is rather crudely strapped to the back of my TV and which now consists of the Pi + a 7 way 2amp rated USB hub which I am using for both powering the Pi and for USB devices - so dual purpose - a 4Gig standard class4 SDHC card (just for boot redirect) an 8 Gig USB pen drive, my MCE remote control receiver and a new mini keyboard/touchpad receiver - with the board connected to my Router via Ethernet cable, TV via HDMI and of course the mains.
If you want a real close up view of the original 4288 x 3216 image you can get it here:
http://dl.dropbox.com/u/62587913/100_0935.JPGMeanwhile, as I know that XBMC works so well on my laptop without any navigation bottlenecks I will keep my eyes open for something as small but more powerful than this edition raspberry Pi to completely turn my TV into a smart TV for a fraction of the cost of replacing it with a commercially manufactured one.