http://xboxmediaserver.com/
You can use media playback with xbox as well but I think you have another computer up and running as streaming source/server so you can't play every stuff native like *.mkv files from a NAS or USB drive (how lame). I prefer using a dedicated HTPC.
The first revision of the xbox 360 was very loud under high CPU load - I don't know if the recent edition is quite enough for home cinema purposes.
- MS's internal teams have already stopped work on 360 games. It'll be dead in 18 months.
So what? Games mady by MS aren't always great and there are a lot of other (way more interesting) publishers out there who can and will continue developing until a certain point. It's most likely that both MS and Sony are going to bring out a new console generation in ~18 month since it's getting harder to provide state of the art graphics on both platforms. Playing graphic intense games in weird sub-HD resolutions looks terrible on large HD screens, especially without proper anti aliasing (like "dude, why does the stairs have stairs"^^).
Once a new generation of new consoles enters the market, there's usually just a short timespan of co-existence. It doesn't take much time until the most interesting games gets released only on the newest generation. Most game studios are already looking forward to this moment since it seems to be a pain in the ass to develop cross-platform games.