[YTNUKLR]

1) The hard drive (or rather SSD) is the most critical element in the sensation of the speed of a computer, not CPU cache, RAM, or resource-hogging OS's.

2) The monitor is the most critical element for an aesthetically engaging user experience.

My set-up: the latest Mac Mini, 27" Apple Cinema monitor, 64GB Intel X25E SSD (Boot/OSX/Applications drive), 1TB-Firewire800 (media storage) standard HDD hard drive. This is connected to my TV through wireless, although I have not done the appleTV thing and gotten rid of cable (yet). However, I do stream Netflix to the TV.

Mac Mini...$600 (BH Photo Video)
Intel SSD 64GB...$445 (ebay, open box unit)
1TB HDD 7200rpm, Firewire800, $100 (BH Photo Video)
Apple Cinema Display 27"...$1000 (BH Photo Video)
RAM upgrade, (1) 4GB chip...$90 (now 5GB total) (NuRam)

=$2235 total. Fastest, most pleasant-to-use computer I have ever touched.

Although I love this thing, I did it a bit piecemeal. If I had a bit extra $$$ I would now do:
iMac 27" 2.93GHz quad-core i7 processor, with a 1TB drive...$2199
Intel X25E SSD, 64GB, for OSX/boot/applications...may vary up to $6xx.00

You would be absolutely stunned by this machine. No other modifications necessary, you will probably have it for 10+ years.

To answer your specific questions:
1) The standard Mac Mini HDD is a 320GB-5400rpm unit. It makes the computer slow. I couldn't stand the wait for my SSD after I got the computer. The drive is easily upgradable: you will need a Torx-20 driver and a set of allen keys. I obviously changed out mine so I can address the pitfalls if/when you get there.

2) OS X is very nice about spanning dual monitors. You can define which monitor the dock lives on, which monitor is left and which is right, and easily set it up to work seamlessly.

3) The Mac Mini drives dual monitors w/ no problems. Unless you are talking about Gears of War at 30fps or something, which is not what I do.