I firmly believe Front Row development is dead, and Apple doesn’t want you to use your Mac mini as a HTPC.
Therefore, I’m not expecting much of the next update. I think the current 2.0Ghz, 320GB hard drive model with 2GB of memory will become the low-end model. And a new 2.2Ghz model with a 500GB hard drive and 4GB of memory will become the high-end for $799. I think they’ll keep the NVIDIA 9400M graphics chip/chipset combo, the SuperDrive (no Blu-ray) and DisplayPort (no HDMI).
I don’t expect an update to Front Row ever again.
Ideally? The current Mac mini with a better processor, Blu-ray, HDMI, 4GB of RAM standard and a 500GB hard drive. I would also like to see an update to the 9400M (what is the 9400M’s successor anyway?) and a minor case revision (maybe a black or silver/black version like the iPod nano).
I would also like Apple to offer a complete Media Center software solution (like Windows Media Center) with DVR and plug-in support for Hulu, Netflix, etc, essentially Front Row 3 (as Front Row 2.0 only shipped to the Apple TV).
And since this is all a pipe dream, overscan correction tools built into Mac OS X (hello Plex, 720p panels that are actually 1366x768 are a bitch to get right in OS X, thanks LCD manufacturers).