RE: 640x480 - Obviously; you're outputting to a television! It won't look quite as nice as that 1600x1200 20" LCD.
OTOH, it's a $200 XBOX, $60 modchip, and $100 120GB HDD solution - stick games, MP3s, DiVXs, and all kinds of other things on the XBOX and have a very nice, very high quality, very easy to use $360 media center. Stream video from your PC and you'll then be able to play whatever media you want over the network - it's pretty handy, actually. And it really doesn't compare with the Dell SX260 mini-pc; the graphics on the SX260 are integrated Intel Extreme - pretty poor for a gaming solution.