I am looking to build an HTPC to watch downloaded content on my HDTV. I want the best possible picture i can get and don't know whther to spend money on CPU or GPU. I thought transcoding and upscaling type work was generally CPU intensive, but it seems some are suggesting that i is moving towards GPU solutions. Where shoud my money go. Ant hardware suggestions and advice as to whether increase in component quality will increase picture quality. I kow it is about the source, but i am taking about what comes after the source.
For a decent HTPC, I think that a good mix of CPU power and GPU power is needed to display a decent image seamlessly. For example, my rig (in my sig) is used for HD movies, Blu-rays, streamed content, etc.. and with the q9400 and the radeon 4850 (middle of the road components), it shows HD files and the above-mentioned things without a hitch.
The HD 4850 is overkill just for watching video. The HD 4650 / HD 4670 will be good enough and consume much less power. There are passively cooled HD 4650 so you don't need to deal with fan noise as long as your case has decent airflow.
GPU encoding is still in it's infancy and the program you use must be able to access those GPU functions.
Video encoding is still done by the CPU in my book, so get the fast CPU you can afford. This holds especially true if you intend on encoding Blu-Rays at the original resolution using the x.264 codec.