Sportplanet has the specs for the new Sega/Pace Dreamcast enabled set-top box.
Today Pace announced the specifications the box is a digital TV decoder, based on a hard disk, and integrates the Dreamcast CPU chip and graphics processor. A disc drive is not included, so boxed Dreamcast games are not compatible. With the present 40Gb hard disc version, up to 60 Dreamcast games are capable of being stored on disk which will probably be available on a pay-per-play basis over some kind of Broadbrand basis. The box will also contain similar feature to the TiVo boxes available.
Kinda makes you wonder if they are going to make DC games on disc or whether you can connect a external CD.