nothing wrong with using a big (size) computer. But using a big (powered) computer is a dumb idea. It will eat a bunch of power and you are doing is playing music and videos and doing some GPS and such. Nothing that a Pentium 3 can't do. So when a via system pulls 11W and does the same thing as a system that pulls 800W just as well, where is the benefit?
Now for intensive applications, do a generation jump to the low wattage, high power (work) processors like the Core 2 Duos and such.
But the form factor is mainly because some can fit it behind the dash with a mini-itx. Also with a nano or mini itx board you can fit it in a small case and tuck it away somewhere or show it off like an amp and doesnt have a huge tower.
If using a high powered system, you will also need a very very expensive power supply.