I stress the "HARDWARE" encoder card that the responses before me talk about. When I made my HTPC at first I got a software encoding card and nothing worked quite right. The hardware encoding card allows me to do a LOT of stuff I otherwise wouldn't have been able to do.
It also depends on what you really want your HTPC to do. The hard drive size is a big deal if you want to do things besides record shows. Personally I would create a seperate partition just for recorded shows. On the "show" partition it's wise to do an NTFS format with 64Kb clusters. That will create smoother playback for your recordings, since they'll all be 1GB+ in size at least.
My personal HTPC records shows, plays DVD's, plays movies off the hard drive, plays Sega, NES, SNES, etc, plays my music library on it, shows me the weather and more. The functions you get from your HTPC are reliant on the software you choose for it. I'm not going to push a single piece of software, or point out a single tuner card mfg. However, read up on any software you choose and do the free trial if they offer one. And remember.....HARDWARE ENCODER!! That is by far the most important part of an HTPC for ease of use.