ok I went the PS3 route as many suggested. Here is the big con on a PS3 in an entertainment center - it get's very hot and the fans start sounding like an mini air conditioning unit. People then just say to leave outside the entertainment center, but with kids I didn't like that setup. Just be aware that inside most entertainment centers (that close) this things gets very loud (not as bad as 360 but enough to be annoying).
2nd con - the remote will only control the PS3, so you have to have another remote lying around. The alternative is to hunt down a PS2 remote with Dongle, then programming a learning remote to mimic commands, then you have a nice setup.