For media, i would assume you'll be watching DVDs, looking at pictures, listening to music, etc as if you said Gaming, it will basically be a high end PC with a kickass graphics card. Thus, i will assume it's a HTPC.
Firstly, you dont need a 3GHz processor. If you liked the hyper threading and stuff like that, then just stick with a 2.4C or 2.8C if you cant find 2.4Cs lying around. Prescotts put out too much heat and can really heat up your case. That's enough for any media useage, even light gaming. Hell, look at my desktop.
You dont need 1GB for a media PC, 512MB is more than enough to have a media PC run Windows XP or Media Edition without any problems or stuttering. It can also run alot of the current generation games without too many problems. The jump in price to 1GB is just not justifiable.
200GB HDD may be nice to store all those videos and music so no other suggestion there.
2 Optical drives, well, i cant be sure, depends on taste.
As was said earlier, the X300 is a god awful card for gaming, but decent enough for a HTPC, though i would reccomend you get a Radeon AIW 9600pro if it were a HTPC with some light gaming or if you were looking into heavier gaming, i would look into a Radeon 9800pro AIW or just a plain 9800pro and grab a separate TV tuner card if you wish to watch TV on it.
The integrated Audio will not cut heavy media use unless you're on a Socket A AMD solution with a NForce2 Chipset and Nvidia Soundstorm integrated audio. The sound output of those things are pretty much crap. This is one of the areas i would splurge out on if i were on a budget and building a home media centre with a high quality audio card, such as a Creative Audigy 2 ZS or a Santa Cruz Turtle Beach card.
Integrated LAN is just fine
A 56k modem is simply a matter of wheter you use 56k to connect to the internet or u use ADSL or Cable, or anything else.
I know this is a prebuilt comp, which is why it falls into the trap of having power where it's not needed and not having power where it is needed. The average consumer without alot of computer knolwedge typically looks into several things when buying a new computer:
Processor Clock Speed
Hard Disk Capacity
Usually they dont understand much about video cards and what's really needed in a media PC, thus, HP built a computer that will appeal to a wide audience, not one that will perform the best for it's function as bang for the buck.
Im pretty sure i can build a better performing HTPC for much less.
For example, ive built a shuttle system based on the SN45 barebone chassis for under HK$4000 (approx. US$512) in total parts, which will perform very adequately as a HTPC if a TV Card were added and maybe if the video card were added, which will not bring the price of the system to over HK$6000, even if i got a 9800pro, which is approx, US$770.