Performance of Atom for home PC

Not well, especially for things like visual studio and matlab. Get a real CPU if you want to do that kind of thing (and I say that as the happy owner of an Atom N270).

^+1...
You wouldn't want to try an ATOM for those tasks...
Newer Celerons are out, that are based on Wolfdale cores - E3300, that are cheap and offer very good performance for the money...So clubbing that CPU with a cheap G31 mobo would be better...though wont be much suitable for smooth Blu Ray or even mediocre graphics...
This would be a good config -
Celeron - ~$50
or E5200 - ~$70 - if the Celerons are not available...
G31 - ~$45
ATI HD 4550 - ~$35

VS and matlab pushed it over the top, atoms are for battery sensitive devices, and you are not going to run matlab on your netbook or cell phone lol

Is it not OK for
- Audio and Video playback
- Internet
- MS office

Or is it slow for these applications also ?

Atom + 945G(variants) is a big no-no regardless how cheap it is.
Atom-Z + US15W can do DxVA up to H.264 720p only, a no go for me. ~$250 for Fit-PC2 if you're interested
Atom + MCP7A (nV Ion platform) is just too expensive and low performance/$ ratio compared a simple mATX setup.

Something like Phenom II X3 720 + AMD785G (HD4200) + 2x2GB DDR2 should fit your need well at lowest cost.

My Atom-330 is a combined MythTV system, web-browser, file server, zabbix server and SVN server; the only thing it can't do acceptably is play back HD video without dropping frames. For web browsing, office-type tasks and SD video it's fine, but H.264 video compression and HD playback are really too much for it.

I'm probably going to replace it next year with an Ion system for playback -- since it will handle HD -- and a low-power Athlon/Phenom/Core-2 backend for recording and compressing video.