Why Android vs generic linux? I don't know except perhaps for the brand PR or maybe more technical reasons with the radio work that google has put in it. Or to finally get rid of X for the UI.
The reason I say on the server side is because of the multitude of STBs out there and the difficulty with getting them to run something else even though they tend to be linux. Can you imagine trying to talk to Scientific Atlanta about their Bell branded STB and how we want to put our own firmware on it? ain't gonna easily happen. And those Chinese companies producing dozens of FTA unit types are also a pain to deal with. It could happen but what about the next STB.. Getting the pay providers to let us decrypt their signal with our own hardware won't easily happen. If we could capture the video (up to HD) and control the unit that would be more generic.
I also don't know enough about the Android environment to know if one could do normal linux hacking to build your own but is worth looking into. I'd prefer to see a client side unit that works with a server based media centre (I personally use SageTV). A complete media centre server would be ideal but that's a big job.
The current client hardware unit for SageTV is an HD-200, you connect to the network and your tv/monitor and optionally to local disk storage to act stand alone. The real power of that device comes with the unit using the power of the backend server where you have access to all the STBs, tuners, music library, online content, and whatever else the server is setup to deliver. I don't actually have an HD-200 as I can't justify the expense (~C$200+) when I only have a single TV monitor. I connect my monitor directly to the server. Occasionally I use the software client on my laptop and that too is another thing that Android might be suitable for. I know of of folks that would love to see a sagetv client on their android phones.
The other issue I have with PVRs is video capture. All of the providers seem to hate that we might want to use a server instead of their brain dead proprietary units so the current method is to capture component analog. I don't like to use the term "the analog hole", that implies that I'm stealing or otherwise doing something against the TOS. No, I only want better control of my media and the option to use a variety of low cost and free sources instead of the all in one services that for me are not suitable and cost way too much. The current video capture device of choice is the Hauppauge HD-PVR that captures component video and feeds it to the media centre over USB. If we could build a unit to do the same thing but more reliably it would be a very popular device.
FCC, the bane of all PVR systems. The HD-PVR uses IR blaster and is horribly unreliable and slow. To fix that people buy the USB-UIRT which is a USB based IR receiver/blaster unit. Much better than simple IR blasting but again is not simple to setup especially if you need to control multiple units. The fastest method that works with a few STBs is over firewire. But that seems like such a waste using firewire only for channel changing because the providers refuse to let us use it for actual video. HDMI capture would also be nice but again the providers cripple functionality because of perceived DRM issues. hmmm, an android STB is sounding better all the time.....
So my dream setup would be a complete Android based media centre server/client with small low power android client units that can be spread around the network. I'd settle for a digital tuner, video capture with FCC, or other units that can better feed content to the server or deliver it to the user. And while we're at it we could drop in a cell radio and use it to distribute cell phone voice/data over the local network...