I am also working on this car PC thing - I have replaced the nissan stereo with one with aux inputs and plan to plug the pc sound directly into the head unit (I have bose system and dont want to go down the route of seperate amp/speaker install).
I have a small form factor PC, running a via epia 1000 chipset with 512mb ram, cd drive and hard disk - also have a power regulator that will convert the 12v battery supply to allow the pc to run (the touchscreen will run directly off the battery supply). Something low power and light is what you want of course - but something powerful enough to run the software you want.
You will also need a power/shutdown control circuit of some sort that will start up the computer AFTER you have started the engine (or cranking will reduce the battery voltage and the computer will just shut down mid disk-access) and then shut down the computer a set time after you turn the engine off). I have bought this -> http://www.cartft.com/catalog/il/574 to use - it seems the best option (along with Opus made ones)
I am intending to mount the pc in the large rear glove box and route the cables through to the dash, where I will install USB sockets. I have a USB bluetooth adapter and a bluetooth GPS thingy that I will be mounting somewhere it can get a lock on some satellites.
The 7 inch (800x480) touchscreen I intend to mount in the satnav cubby - apparently it's best to get your hands on a 2003 cubby as they are easier to fit a touchscreen in. You will need to do some cutting of the cubby and remove the touchscreen from its casing to fit this stuff.
Once the hardware is set up there is of course the problem of what software to run - check out www.mp3car.com and there are quite a few different front ends available, that do most of what you might want (music,dvd,satnav etc). I have been writing my own software but its a very on/off project for me - and I will probably end up using some of the pre-written stuff in the end (I have the music stuff written nicely, and some satnav working using mappoint 2006 api's).
Anyway if you want to read up about it I would really recommend the forums at
http://www.mp3car.com
and for buying bits you might need I would recommend
http://www.cartft.com (this is a german website/company but I have ordered from them before several times and also had to get replacement items sent and they have no problem dealing in english)..
I would budget 800 pounds for doing a proper job of this btw (unless you already have some of the things you will need)..