I've been trying to put my PC in the living room for years but the control setup is just too frustrating.
The 360 controller is just about the best setup but the Windows UI doesn't work with it by default and as you enter / exit games, not all of them hand control properly back and forth between programs (from game to XBMC or Steam). Let's not even talk about games with splash screens that you need a mouse to get past.
If you figure out the controls (like with a PITA configured Pinnacle Game Profiler or similar), there is still a small matter of PC UI on most games, which is just way too small for living room use. The majority of PC games are still designed with a default assumption that you have a monitor in your face.
Maybe with Steam Machines this will change but at this point consoles are still the best choice for the living room, I'm sad to say.