My parents just got an Apple TV for their New York apartment, and within a couple of hours I can say it's a lot of fun. Movie trailers from Apple in HD or videos from YouTube load up blindingly quickly -- especially those HD trailers, whose speed beggars belief -- and, while it's slightly awkward to search using the onscreen letter selection, anything that's on YouTube can be found. It's all such fun.
Apple TV also plays music, synced wirelessly with iTunes on your home PC or Mac. It's also fun to browse your music collection on your TV, flipping through the album covers (if you've bothered to acquire them of course) and playing the music out through whatever speaker system you have there -- great if you've got a surround sound setup! This syncing also allows you to get at any videos that are on your iTunes, so whether you've legally bought it or illegally downloaded it, if it's playable in your iTunes you can now play it on your TV.
It also allows you to purchase movies and TV shows from the iTunes store directly from your TV, either as rentals in SD or sometimes HD (for films), or to keep (for either). That's definitely something we'll try out sometime soon. Apparently the quality of HD movies isn't as good as Blu-ray -- it streams them, rather than spending forever downloading a Blu-ray-sized video file -- but should still be impressive. Some of the TV shows are also very reasonable priced, making them seem like fair rentals (with the full-priced ones I often wonder why not buy the harddrive-crash-proof DVD or Blu-ray instead?) You can also buy music and music videos from your Apple TV.
In all, the Apple TV is a lot of fun if you download (or would download) a lot of TV and movies and would like to properly watch them on your TV, or have a good sound setup and would love to hear all your music through it. There are other solutions, of course, but this one integrates seamlessly and works perfectly. But then, it is made by Apple, so what did you expect?
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