I'm really looking forward to getting a Raspberry Pi and using it as a media center! Think about it, I can stream movies, browse the web, and play SNES/GBA/PSX games!
I have done the media center thing already with a first gen Pi. It was really slow in the menu, but hey, 256mb of ram, 5W and fluid 1080p movies? I'll take it over any full blown media center any time. What you want will take some time to setup tough if you want it to work smoothly. (hope you have experience with linux if you want to make it quick :P)
Depends on what you want to do :P For actual hacks, the RPi can be a bit overkill. For example, say you want to create a thing to turn certain lights on and off. Then the RPi with 5W, 800MHz, 32 bit ARM chip is most certainly overkill and way too expensive (easy to use tough). For a media center it is really cheap, but it will still set you back $50,- at least when also buying power supply, HDMI cable and the SD card.
It really depends on what your constraints are. Personally, I would use some cheap micro controllers (all but Microchip) combined with some simple analog circuitry. Arduino does not fall in the category of cheap micro controllers as far as I know and wireless capabilities must be added with a separate shield. The upside of Arduino is that there is a huge developers community, the good general availability of the parts and easy programming of the Arduino. In short, using Arduino is most certainly easier than normal micro controllers, but some things you might want to use are not easily added and used and are more costly to use.