Android with Netflix/Hulu/Amazon plus XBMC ought to make a very satisfying set top box. If you're doing that though, you might be better off buying an Ouya for the same price, and getting the controller + games as well.
My biggest issues with the Ouya are that the one USB port is USB2 (not 3), and that the options for USB storage are pretty gimped currently. Some apps aren't too bad at being able to use USB storage, others are.. and you can't install anything to secondary storage as it stands.
Definitely true. I stream most of my media (home server, seedbox, or Netflix) so the storage isn't that big a deal. I have an 8gb flash drive for ROMs and haven't come close to filling the internal storage with games.
I wouldn't use the Ouya for serious storage anyway because I couldn't readily access or manipulate that data through the network, but that's just me.