I've my mini set up as a video/music media centre, I couldn't be happier with it.
The mini itself is connected to a 26" Samsung HD-TV via the VGA PC Input, sound goes to the TV via the PC Input also (3.5" Jack-to-Jack cable), and a network cable between the mini and my Mac Pro's second Ethernet port.
I have my iTunes library shared on the network, so the mini picks that up via Frontrow and works as if it were actually stored on the mini itself. I mounted my Mac Pro's Hard Drive on the desktop of the mini and created an alias to it in the 'Movies' folder. Again, Frontrow jumps straight over to the Mac Pro whenever I select 'Movies'.
Responsiveness is fantastic! I used to connect wirelessly but although iTunes worked really well, it took a few seconds for frontrow to generate the previews of large movie files which made it a little sluggish when navigating a large list of movies. However, now that it's connected directly to the Mac Pro via Gigabit Ethernet, it simply flies.
It's also great how I can sleep the mini and wake it up with the remote, and it even remembers the connection to the Mac Pro, so once it's set up, all you need it the remote and no more (even the TV switches itself off whenever it detects no more input coming from the mini!)
All-in-all, as a one-stop machine for allowing you to watch videos and listen to music stored on another machine in your house it simply can't be beat (and the video/sound quality is superb).
Hope this helps you with your question