Never used a media centre pc, but I have tried using software on normal windows that is supposed to allow hard disc recording etc. and am not too impressed.
If you keep the system really (and I mean really) clean then my experience is that Windows based PC recorders seem to work OK, but not as good as dedicated HD recorders. For me the picture quality on normal TV is just not good enough - can't imagine how well it would work with HD-TV in the future.
The biggest problem I have had is that if you use the system for any other purpose I get frames dropped, codec clashes and generally very poor performance from DVR which makes it pretty unuseable for anything important to me.
I'm sure WMC works better as it has more standard components to do the job, and some of my problems may come from using an ATI Radeo All-in-Wonder card but I still wouldn't trust a PC at the moment to be the only method of doing this sort of recording.
There are some really nice DVD-VR and DVD-RW recorders out there with very large hard discs and great quality - have a look at Pioneer's range for instance - which are cheaper and excellent quality. Check out what's on www.webelectricals.co.uk
I have a JVC DVD recorder (without hard disc) which I am now pleaseded with (they swapped the box after a lot of problems with my particular model and it now works fine). The DVD picture quality is excellent and surround sound support is good.
If I had £1000 I could spend on this personally I would buy the best home cinema surround sound system with the facilities you want - I think it would deliver much better quality than any PC is capable of yet.
For the moment the whole area is in such a state of flux, and price freefall, I would go for something cheap and cheerful that does the job, and wait until some of the new HD-DVD/Blu-Ray systems appear down the line.