ipod -VS - Mac-Mini

I agree with Budrew. If you intend to use this as a source for your main system, I would go with an iBook and a USB DAC. This will be light years ahead of the iPod sonically. Plus you can use an external hard drive to rip too, that will give you much larger capacity than the iPod. However, if you are looking for a portable device that you can hook up to your system on occasion, then the iPod is a tremendous value for money.

You can also just get a USB/Firewire device to get either a digital or optical out of your computer and then line that into an external DAC component (probably better quality and cost than an integrated computer usb/dac device).

Also you can just buy an Airport Express and get the optical out cable to go into a DAC, this way the computer does not even need to be near the stereo. The Mini will be the best price and can come with an 80GB drive you can swap or add to ...I have all my music lossless so if you plan to compress then going with a cheaper integrated usb/dac might be fine. You can check out my system ...I think it is similar to what you are looking at.

I agree with the above sentiments on using either the Mini or a laptop for your source. You will end up wanting an iPod too so budget that in, but you would not want to use the iPod as your source. You can look at my system (and others) to see possible configuration.