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Pros: Fantastic device. Some of the highlights are;
1. OS on an SD card - allows you to try out various OS's with little to no work. Can switch easily between openelec and raspbian easily.
2. RCA video output + audio port - add a 3.5 mm to RCA audio cable and you can plug this in to your old (seriously old) tv and have an HTPC on it.
3. Ultra low power - leave it on all the time, no worries about power consumption.
4. Accessories - there's tonnes of them, newegg needs to get in on it.
I bought this specifically to hook up to an old 27" television I had. When I came accross the Pi, I was pleased that it had the RCA outs and had to give it a try. For less than $70 bucks in parts (Pi, cables, SD card, case), plus an old 500 GB HD I had a fully functional HTPC for an old TV.
Cons: Not the greatest HTPC out there, but like I said, you can hook it up to anything with RCA inputs. Good luck doing that with anything else. Openelec slows down drastically if you let it download album covers, artwork, etc., but it doesn't affect video playback, just the smoothness of the interface. I'm playing back SD and 720p content, so I can't comment on it's 1080p abilities.
Other Thoughts: This item should have inspired me to do more with it, but I just haven't gotten around to it. Would love to start some projects out there on the web.READ FULL REVIEW