I would definitely use a Mini-itx based PC with an i3 CPU. It's built in graphics would probably be enough for 16bit emulation.
You can get some nice cases for this form factor too, that are really small.
I would definitely use Windows 7 for emulation. No other OS has near to the same level of emulation support.
Sent from my Nexus 7 using Tapatalk HD
My Atom dual core netbook on energy saving power settings was enough for 16bit emulation