I purchased my Apple TV about a year ago (June 2008) and had researched quite a bit before buying. The advantages to this unit is that it is basically;
1) An add on that compliments Itunes and your home WIFI connection.
2) Play internet clips, movies, HD movies, music from Itunes, pictures from itunes and flickr, and surf you tube.
3) Don’t get annoyed squinting at your computer to watch that crappy movie that you can watch in HD on your tv
One of my my goals when I bought this was to bypass my computer and watch my computer on my tv. There were a couple other boxes out (Windows Media Extender) there but not as developed and simplistic as Apple TV and seemed like there were formatting issues that need to be resolved on your computer before watching. Thanks to the intuitive interface, finding what you want to watch is as easy as navigating a few simple menu items using the included Apple Remote.
My other main goal was to use it as a bridge between my itunes library and the TV in my living room to play music. If you don’t have your computer in or near your living room and want to listen to music you can either purchase Air tunes or Apple TV. Apple TV was a way to play music on my nice receiver and sound system in my living room and not those shitty computer speakers that i got back in the last decade and all the way in the other room. My couch is more comfy too and ideal for entertaining people rather that having guests over to go to my computer room and play music or bust out some prehistoric scratched cd’s.
Now, there are choices between storage capcity between 40G and 160G. This completely depends if you intend on storing the movies if you buy them. I rent them and they stay for 30 days. I gave up on the idea a long time ago of keeping movies because I find that I never watch them again. I have DVD’s sitting on my shelf collecting dust. However, some people like clutter and enjoy watching Caddyshack, Star Wars, Batman Returns, P.S. I Love You and other classics 100 times. In this case spend another $100 for the 160G instead of $230 for the 40G.
Bottom Line: It’s a great bridge between computer and TV and because it’s Apple it is really simple to use. The HD is excellent for when you download movies!