If you want a nice little box to sit by your TV, you can't beat a Nintendo Wii.
You can pick them up for around a tenner now and all you need is a 1Gb or 2Gb SD card, which you can pick up for pennies.
The console is softmodded by a program called WIIBOMB, and isn't illegal, and takes about 20 minutes with some excellent Youtube guides online.
Then you can fill it with any emulators of your choice. I've got a SNES, Commodore 64 and Spectrum emulator running on mine. You can plug in any USB keyboard to get full control of games.
Its also a full fledged media player and will play video files from USB sticks. And you can also plug in a USB hard drive and copy your original Wii games over to it for faster loading.
If you want the full retro experience you can now buy the original console controllers with USB connectors:http://tinyurl.com/zm9objs