Parapunter,
The two things are inherently different and the WD TV HD (Could do with a better name) seems to be a nifty unit.
Whilst I already have SKY HD (Multiroom) I do watch the odd DVD now and then, mainly cause SKY keeps repeating the same old dross. So to digitise my dvd library and make that available is appealing for such a budget price.
Media centre PC's have their place but it would be like cracking a nut with a sledgehammer. Even the small shuttle boxes are much larger, costlier and usually noisier (water cooling can silence these) than this box with an attached USB drive - and way more complex to operate.
Being a software developer I restrict my Computers to my study so that my living room can be considered just lesiure and not a work environment. I find it important to maintain that seperation as I work alot from home.
It is horses for courses, if I did not have Sky + on my HD box then I would look at a media centre PC for the PVR functionality - Bushfiva is probably in the USA so freeview is not really going to be an issue and you get all that and more on sky. Connecting your media centre pc to cable is possible but you will lose the specifics of being able to access a cable providers pre-recorded content as each implements this differently.
In summary - Media centre is good and has its place should you wish to dedicate time, money and resources to it but it is not everyone's cup of tea. Having already invested in a surround sound av amp, sky + etc it makes more sense to add this cheap unit rather than re-engineer the whole system.
Cheers
Jof