Yes. I do this, although I also use a dedicated HTPC by my TV. A little expensive but gets used all the time and I can stream Netflix, Hulu, watch a movie in almost any format including Blu-Ray.
I've looked into alternatives, (PS3, dedicated media players, etc, etc) but nothing else has everything I wanted.
Here's a list of features from the wikipedia page (http://en.wikipedia.org/wiki/Windows_Home_Server):
<list removed because formatting made it unreadable. see Wikipedia entry for details>