anandtech has a nice article about HD Video decoding:
Conclusion:
Nvidia has better quality, minimal 8600 don't use a 8800
AMD has lower CPU utilization minimum 2600 don't use a 2900
Those who choose to stick with very well produced 1080p content may not need post processing noise reduction or de-interlacing, but they might miss out on imported content or HD releases of some TV series (depending on what studios choose to do in that area). For now, we're going to recommend that users interested in HTPC setups stick with the tools that can get the job done best no matter what the source material is. The only options for HD video intensive systems today are the Radeon HD 2600 and GeForce 8600 series cards. For its better handling of noise reduction (and especially the fact that it can be turned off) we recommend the 8600 GT/GTS above the other options in spite of the fact that the 2600 XT provided better CPU offloading.
We have to stress here that, in spite of the fact that NVIDIA and AMD expect the inclusion of video decode hardware on their low end hardware to provide significant value to end users, we absolutely cannot recommend current low end graphics card for use in systems where video decode is important. In our eyes, with the inability to provide a high quality HD experience in all cases, the HD 2400, GeForce 8500, and lower end hardware are all only suitable for use in business class or casual computing systems where neither games nor HD video play a part in the system's purpose.
AMD's UVD does beat out NVIDIA's VP2 in both H.264 and VC-1 decode performance. However, it isn't really enough to make a tangible difference in the viewing of movies. Performance is important, and UVD performance is certainly impressive. But we still have to favor the 8600 for its superior image quality.
http://www.anandtech.com/video/showdoc.aspx?i=3047
Conclusion:
Nvidia has better quality, minimal 8600 don't use a 8800
AMD has lower CPU utilization minimum 2600 don't use a 2900
Those who choose to stick with very well produced 1080p content may not need post processing noise reduction or de-interlacing, but they might miss out on imported content or HD releases of some TV series (depending on what studios choose to do in that area). For now, we're going to recommend that users interested in HTPC setups stick with the tools that can get the job done best no matter what the source material is. The only options for HD video intensive systems today are the Radeon HD 2600 and GeForce 8600 series cards. For its better handling of noise reduction (and especially the fact that it can be turned off) we recommend the 8600 GT/GTS above the other options in spite of the fact that the 2600 XT provided better CPU offloading.
We have to stress here that, in spite of the fact that NVIDIA and AMD expect the inclusion of video decode hardware on their low end hardware to provide significant value to end users, we absolutely cannot recommend current low end graphics card for use in systems where video decode is important. In our eyes, with the inability to provide a high quality HD experience in all cases, the HD 2400, GeForce 8500, and lower end hardware are all only suitable for use in business class or casual computing systems where neither games nor HD video play a part in the system's purpose.
AMD's UVD does beat out NVIDIA's VP2 in both H.264 and VC-1 decode performance. However, it isn't really enough to make a tangible difference in the viewing of movies. Performance is important, and UVD performance is certainly impressive. But we still have to favor the 8600 for its superior image quality.
http://www.anandtech.com/video/showdoc.aspx?i=3047