All you need is a typical PC at your local retailer (like an Acer for $379). Spend more, and you'll get a HTPC that may be more reliable, will last longer, be more powerful, or contain a BluRay player.
The Acer comes with HDMI, Win 7 Home Premium (comes with Media Center), 500 GB HD, DVD Drive, etc. Add an Infrared Receiver and remote control (you can find these on-line for about $30). Now you have a HTPC.
Windows Media Center will play your DVD's, or you can rip them with some software. It will play your music, and photo slide shows. You can add some free software, like Media Browser that will catalog your DVD's, get you movie trailers, and allow your to set up video podcasts for streaming.
Later you can add more hard drives (you can get an internal 2 TB drive for $60 right now) or a $120 TV tuner to grab cable or Over the Air (OTA) TV and make it a Personal Video Recorder (PVR).
Grab software called Remote Potato, and your iPad/Pod can see those Recorded TV shows, movies, or play your music from anywhere. The possibilities are endless. Start simple.