Mac Mini vs WDTV as a Music Server ??

AppleTV would have been cheaper and easier, it's basically a no frills MacMini with better A/V connections and no disc slot.

Macdadtexas:

You make a very good point.. But just in case I want to go
hog-wild and serve up video as well, I am going with either
a MacMini or a WDTV due to both having 1080P video output.

Since the AppleTV only does 720p, I want to give myself
the option of 1080P via a MacMini or WDTV. I didn't
mention it as a main topic item because I wanted to focus
on the sound quality side of things..

Mac Mini with a SSD/ I,ve been researching Apple sights for months and cant find that option .

The Apple TV does 1080i which you probably won't be able to tell the difference from 1080p. I think one thing that I would keep on the lookout for would be the Boxee unit that is supposed to come out later this year.

I recently switched from the Apple to Tv to a Mac Mini as an HTPC. Prior to the Apple Tv i had tried several proprietary single box solutions; anyone remember Turtle Beach or Roku.
The single box propriotry solutions, and i would lump Boxee into this were for lack of a better word disasters. SOftware that had not been properly tested, hardware incompatibility issues and limited playback formats. I suspect that the WDTV would suffer from the same limitations. To much competition in the market place. i give Western digital 12 months before they drop all development and support of the UI
My suggestion would be to go with the Mac Mini run with a USB to and external DAC; the Benchmark is a slam dunk in my opinion.
For the UI load Plex currently in pre-release but its interface is gorgeous, plays back video and referecnes your itunes library