While the availability of small form factor PC cases are becoming increasingly widespread, as is the availability of small form factor motherboards and components, the choices aren't as varied as standard size cases and components. Also you'll find that small form factor components tend to be more expensive.

The next thing you'd have to contend with is the problem of heat. Cramming the latest technology into a tiny case inevitably puts components that generate a huge amount of heat (CPUs, graphics cards, northbridge, etc) closer together which then puts a greater emphasis on cooling. While you could cool the tiny rig with large fans you then encounter another problem, sound. Sure your teeny weeny home theatre PC is smaller than a poodle puppy and looks good near your TV but it generates the equivalent sound of a 747 during takeoff. Defeats the object I think you'll agree.
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Ditch the dreams of an ultra small HTPC because it'll just cause you headaches. Me personally, I value functionality over aesthetics, with that in mind I went for a huge full tower PC case which was built for quiet operation and has the bonus of looking good too. I went for the Thermaltake Armor case in black. After a while you do get used to it in the front room and it becomes part of everyday life. Don't forget that you don't have to place your HTPC case near your TV, you could tuck it away behind the sofa. If your case is going to be on show it's a good idea to choose your components so that they match colour-wise.
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