I dropped by the Apple Store the other day to check out the Apple TV. I was disappointed with how the Apple TVs were demoed in the store. They were sharing the same Internet connection as all the Macs and due to the bandwidth being completely saturated by people browsing the web, it took several minutes before trailers would load on the Apple TVs. The Apple TVs should have been on a separate connection or the trailers should have been cached locally.
Another issue was the disappointing video quality. While the menus and artwork were crisp and clear, the video quality of the movies and trailers was horrible. The Apple TVs should have been configured to stream the 720p trailers instead of the lower resolution ones.
I felt that the remote for the Apple TV was too small and was not happy with the way video seeking was implemented. I think most people would prefer using a scroll wheel for video seeking.
Out of the box the Apple TV is very limited, but there’s a lot of info over at AwkwardTV on how to make it useful.