ActiveWin has posted some pictures from CES of Creative's prototype of a personal media center. Yes, it's a prototype, but the device itself looks a little chunky.
I'm not sold on actually watching movies on the device - maybe on a long flight but that's about it. But, the video out opens up some interesting possibilities. Imagine if your pocket MCE syncs up with your home MCE. When you go on the road, you just take your little handheld with you, hook it up to the TV, and get all your TV shows and movies and music. That's pretty neat.
Between this and the Media Center Extenders I was talking about the other day - Microsoft could actually be in our living rooms before we know it. I'm excited to see what comes out of this space over the next year or so.