I bought a 1.83 GHz C2D A1176 Mac Mini (2007) for $150 on eBay. I bought 4GB RAM for $45, it already had Lion installed. I bought a 500GB 5400RPM HD for $50. I bought an OWC SSD for $70 and a caddy $50
Total Package: $365 but the SSD and 500GB hard drive will step this machine up for a while. The smaller of the two new Mac Minis is $600.
I have another mac mini A1176 Core Duo. I upgraded the processor with a T7600 for $30 (Amazon) and formatted the 80GB drive and installed Snow Leopard which I have already. I did buy a new optical Superdrive ($50) because I want to play DVDs on the beast. I left the original 2GB memory in it because I don't want to risk the firmware upgrade in case I end up with a brick. So $80 and I have a fairly decent upgrade.