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MythTV rocks, I've got it set up in my house. A backend server with all the storage and two tuner cards, and frontends on 2 seperate TVs, soon to be 3. Works like a charm, and holds all our music and photos too. You'll want to be somewhat comfortable with Linux to get it up and running, but it's come a long way in a couple years, and there are some good tutorials and such out there.
Make sure to keep in mind youll need a video card with a TV-out, as well as a tuner card. Also, you want a machine that is above all quiet and cool. SFF is the right idea. That 3200+ processor will definitely be strong enough--in fact, it will be overkill. As long as its about 2ghz or the AMD equivalent, you shouldnt have a problem. If you have a hardware encoder card, you can get away with significantly less than that--probably less than 1ghz.
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"Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws."
--Plato
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