Using Raspbmc linux OS installed on Rasperry Pi along with XBMC media app can turn any TV into a cheap smart TV.
Rasperry Pi is a cheap mini PC we have talked about a lot here. Designed for students and computer enthusiasts this Rasperry Pi Model A costs only $25. For $10 more you can upgrade to Rasperry Pi Model B with better specs. Rasperry Pi board has been used to operate robots, decrypting communications, or as cheap access to the internet.
Raspbmc released Linux OS Version 1.0 with XBMC media app for Raspberry Pi to work as a smart TV interface. It offers full screen UI for your TV for watching movies, or viewing your family pics. The setup may require video codecs like MPEG-2 for $3.16 and $1.58 for VC-1.