Years of rumors about a Valve funded console have finally culminated in the release of Big Picture. Big Picture is a new interface for the Steam service that will allow the user to connect their PC to their TV. It only requires the installation of the normal Steam Client onto a fairly standard spec PC, and a connection to the TV through HDMI.
GRAPHICS CARD & CABLES
The CPU requirements are fairly minimal. Either a 3GHz single core processor, or a 2GHz dual core processor. Most machines newer than 5 years will probably have one of these. The price of cards with HDMI ports and the price of cables have gone down drastically. Pictured below is a $34.99 graphics card from Officemax that meets the recommended requirements for Big Picture. It doesn't say whether it comes with an HDMI cable, or just a DVI with VGA adapter, so there's a second link below that for surprisingly cheap HDMI cables. A two pack of 6ft cables for $14.98 through Sams Club.
6FT Premium High-Speed HDMI Cable 2-Pack - TV Cables & Accessories (Google Affiliate Ad)
Additionally, Big Picture adds increased functionality through a 360 gamepad or Logitech game pad. They've created a method typing with a combination of the analog stick and face buttons called the Daisywheel. It's rather fluid and easy to understand. Keeping that in mind, there's also a web browser included for taking use of the new controller style. The end goal is to allow people who have preference for a controller to not be forced to use a keyboard and vice versa. Everything in Big Picture can be done with a keyboard and mouse, as well.
If you need a controller, for most people I suggest a wireless 360 controller. They're fairly inexpensive, coming in at under $39 from Sams Club. If that's still too much, or you prefer a controller more like a Playstation's, there are a few Logitech pads that are cheaper, including the F310 listed third among the links. However, that pad is not wireless, so keep that in mind.
Microsoft Wireless Controller - Black -Xbox 360 - Xbox 360 Gear & (Google Affiliate Ad)
Microsoft Xbox 360 Special Edition White Wireless Controller - Xbox (Google Affiliate Ad)
If using a wired controller isn't an issue, and you care more about having the coolest controller in the room, but don't want to break the bank, go with the Razer Onza. At about the same price as the above wireless controllers, the Onza has a 15 foot cable, which should be more than long enough to reach your couch, plus extra customizable buttons, an ergonomic design, and it's from a very reliable brand.
That is their lowest end controller that I could find, and they just get better form there.
You should be good to go, now. If you need more parts or want to shop around a bit, I'd suggest Newegg. They have pretty much everything, and it's fairly easy to use their search features to narrow down what you're looking for.
Good luck, and let me know how your Big Picture set up turns out.