I am currently configuring a Home Server that I would like to hook up to my PS3 to watch 1080p videos. Do I need to have a dual-core processor to accomplish that or will a single core suffice? I am thinking that the PS3 will do the work and all I will need is just a fast LAN connection, but I am concerned about transcoding if the filetype isn't supported on the PS3.
I'm not sure what filetypes / compression codecs that the PS3 supports, but in theory, you could use a pretty old computer as it will just be reading from the hard drive and sending data over a network. So you could pretty much buy the cheapest parts possible. You don't technically even need a gigabit adapter, as HD video and audio won't saturate 100Mbps.
If you are streaming files that the PS3 supports, anything will do, even a NAS with a DLNA server (and they only have pathetic processors)
If you are planning on running something like twonkymedia to convert on the fly, the faster the better - i would go with probably a core2duo above 2.5ghz with 4gb of ram.
The other thing is to ensure you have a fast wireless network, preferably homeplug or wired, at the very least try and make sure your ps3 and server are wired to your router even if other devices have to be wireless.