I was going to call this, "How to build your own GoogleTV/AppleTV (but not as good)... for free (except for the stuff you have to buy)."
I've been thinking about this a while. A smart phone could make a great universal remote. Add a little computer to store, retrieve, find, and play your music and movies, pull in content from the outside, plug it into a nice stereo and you're set. Forget physical media. Digital copy is where it's at.
Thinking about the "entertainment center" from basic principles, I decided to start with music, figuring it's a simpler problem to solve and a really good solution can be expanded to video. I've used Apple's own Remote app for a while, and it's good but not quite enough. I want more than just iTunes, I want Internet radio, podcasts, and anything I can fit on the hard drive and play. I figure a Mac mini is flexible and unobtrusive enough, it can all be done with software, and it has digital audio which I can feed into my home stereo (a low-power but great sounding surround sound job). That's another thing, I bought this stereo with a gazillion inputs, and now I only use one. I call that progress.
Now on to the software.
Just about every radio station is streaming on the web somewhere. All I needed was an easy way to point a web browser to the URLs of their streaming sources. I used Sqworl.com because it's simple, it's cloudy (I can make changes to my Sqworl pages from anywhere and use them on a little computer on the shelf which is now music central), and because it generates thumbnails of each site automatically, creating an easy push-button interface.
Once I signed up for a Sqworl account, I added my favorite music links: KFOG San Francisco, WWOZ New Orleans, Pandora, etc. This is going to be the face of my remote. Not bad for a quick and dirty UI.
I also needed a remote desktop, so I can configure and maintain the little music mac from my desktop computer, and besides a lot of this is trial-and-error. On a Mac this is done through VNC (Virtual Network Computing). There are a number of VNC apps, some free some not. I use Vine Viewer from TestPlant. It's $30 but has some advanced remote administration features. I like that stuff, not everyone does.
Once I could operate the music mac remotely, it doesn't need a monitor, keyboard, or mouse - but I keep them handy in a nearby closet in case something goes wrong. VNC requires a server on the music mac and client on the desktop computer, where I'll be working from unless the server stops running, in which case I'll need that keyboard, mouse, and monitor.
Now for the remote. I decided to try Mobile Mouse from RPA Tech. This allows you to use your mobile phone as a wireless mouse or trackpad and click those big Sqworl buttons on the screen. That screen could be a remote desktop, say across the room or even in another room, or it could be a digital TV right there, but you do need a display. If you decide to attach a TV, you could make another Sqworl page linking to Hulu, Netflix, or whatever. If you use a remote computer, you can have it run the mouse server too. The Mobile Mouse Pro includes audio and video controls, much like your standard DVR remote, and uses the accelerometer so you can wave it in the air while chanting Hogwarts incantations if that's your thing.
There's the quick and dirty - and extensible - home multimedia kit. Two client-server programs, a neat little bookmarking site, and a smart phone. Just add content.