Ultramobile PCs are certainly not iPod killers although ithey are among the smallest devices capable of running iTunes. With a UMPC, you should be able to take all your tracks purchased at the iTunes Music Store and play away with a semi-mobile form factor. The main difference is licensing. While tracks purchased at the iTMS can be transferred to an unlimited number of iPods (luckily for Karl Lagerfeld), the UMPC would have to count as one of the five computers on which you're allowed to authorize iTMS downloads.
As iPod popularity has exploded, though, third parties (and to some extent, Apple) are now stretching its role from digital spoke to digital hub. Belkin, Logitech and others have enabled it to transfer its music across a house. And now, with video output, DLO, Xitel and others are creating living room docks that increasingly sophisticated interfaces. I haven't seen anything yet that can turn the iPod into a DVR, but that seems to be a logical jump from the many video editing packages from Pinnacle, Intervideo and others out now that can export movies to the new "small screen."
So, forget the Mac mini. Apple's leading media center fits in your pocket, and is a lot cheaper and easier to use than the VIIV avant garde from Microsoft's customers.