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The mini was based on the equivalent ibook when then mini was released (ATI 9200 I think).
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Actually, it was based on the eMac. I'm guessing the Mac mini will stay an entry level computer -- with a Core Solo processor and without DVR functionality -- but will add Front Row and a remote just in case.
I also think there's room, especially now that Apple has a greater array of processors to choose from, for a wider form factor desktop similar in height to a Mac mini with a Core Duo in it. Mac Pro, when it comes out, will presumably have a higher-end processor (Conroe?) to differentiate itself. (I always thought the main reason Apple didn't release a midrange headless desktop wasn't for fear of cannibalizing iMac sales, but Power Macs, since they shared the same processor for so much of their lives.)
This $999 dream system could use desktop-sized hard drives and RAM to increase storage space and keep down the cost, and use the optical audio out they have on iMacs. It would also have a single expansion slot, into which you could plug any of an array of cards -- such as a Miglia AlchemyTV, for example. And, conveniently, it would be exactly the same width as your average stereo component, making it an even more natural living-room PC than the Mac mini. What could they call this not-quite a mini, not quite a Pro Mac? Uh, how about Mac.