Mac Mini upgrade would be great
Imac is nice, and upgrades are always welcome.
The Mac Mini needs it, though.
Faster processor
More RAM memory capacity if at all possible.
The X3500 Video system suggestion with HD quality sounds FANTASTIC.
Wireless N for compatibility with AppleTV, but most importantly Time Capsule. Gigabit Ethernet should be a no-brainer, c'mon Apple.
BluRay laptop-style drive would be great, with full hardware compatibility to play BluRay media in HD format natively.
I think it could make a great headless alternative to an iMac, but even more, a FANTASTIC little option for a Home Theater controller, with FrontRow controls, EyeTV tuning/DVR capabilities to an attached external or networked storage drive, Griffin SharkFin radio tuner, and optical multi-channel output to an amplifier, and HDTV video output, even if converted to HDMI via DVI port.
Possibly even with an internal SSD running the operating system, with an external or networked large-capacity HD-drive or RAID array via USB, or preferably FW800, that could be a fairly high-value little system, and probably less expensive than an overkill Mac Pro, or a too-consolidated iMac.
That could get rid of my DVD player, receiver, and HD tuner/DVR, and other Home Theater components. That is the problem with AppleTV, it is ANOTHER source in the stack, it doesn't replace the stack, or parts of it.
Now if only something like the Simplifi ADAT 7075A Home Theater PC Amplifier would work with the Mac Mini's toslink optical output, and USB control software was compatible with Mac OS/FrontRow... (That HTPC amp has only a toslink optical digital audio input, USB control input from Home Theater PC, including system volume, and 5.1 channel speaker outputs. They also have USB-only input, where the audio stream is carried over the USB bus, sans toslink.) Or an even better single-source 5.1 amplifier with digital input.
That and a nice LCD HDTV monitor for video display, and my NHT 5.1 loudspeakers that are already in place. Then I would be in business. This is the system I want to build by Feb 19, 2009, when analog broadcast ends, and digital HD monitors come down in price due to market adoption around and after next christmas.
But so far the parts won't exactly work seamlessly, unfortunately.
But the reports I hear about the penryn-based machines may make this Mac Mini rumored upgrade very interesting to pay attention to.