Need HTPC spec help..!!

[Columbo]

Do I go for CPU or GPU to do the encoding for 1080p video?
What would be the minimum spec CPU?

Eg: Could a Celeron D 3.06ghz handle 1080p encoding if I had an ATI gpu doing the encoding as well?

 

[Columbo]

Decoding is what I meant bud, thats not the CPU I'm going to use by the way. I'm just trying to see what I can get away with using and what the rest of my spec should entail.