I've got one of the 1st gen ones with 256Mb RAM and I've found it fine for streaming 1080p and other basic media activities. I didn't try very hard but I never had much luck using it as a low spec browsing box. Maybe the 512MB models will be able to handle GUIs a bit better.
Anyway, Raspbmc gets a double thumbs up from me. I really love being able to stream internet radio through it too.
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