So my AppleTV arrived this morning and of course I dropped everything to spend an hour or two setting it up and messing around. First quick impression: it's a lovely product, and absolutely fills an important hole in our media system. And the Expanded Front Row UI is fantastic.
But I have to say, I'm surprised they're not selling TV shows and Movies in 720P HD format and surround sound. I've got to believe they're coming, but why not have them in sync with the launch? Yes, consumers happily took a hit in audio quality in embracing their iPods and the iTunes Music Store for music, but by definition the people who have bought AppleTV have invested in an HDTV; they're people who CARE about image quality. (And I think most of us would agree that the difference between normal television and HD is much more pronounced than the difference between CD quality and the default encoding of iTunes -- to the lay ear/eye at least.)
Same goes for surround sound. People who bothered to install center and rear channel speakers are not going to give up Netflix for dual-channel, slightly less-than-DVD quality sound.
As I said, I can't believe they won't be offering this soon. And if they don't, it's still worth it to me as an iTunes/iPhoto jukebox, and a way to watch shows I didn't grab with the DVR. But I don't understand why they're not embracing real HD on day one.
Updated 3/23 9:07 AM: Better news on the HDTV front. It's super easy to get your own HD video playing through AppleTV. Last year I bought an HDTV camera for home movies of the kids, and ever since we got it I've been frustrated by how hard it is to get that video onto our TV. You can now edit in HD quality in iMovie, but if you want to put it on the big screen, you have to burn it to the lower-res DVD format. (It's hard even to see HD quality on your mac itself, since iMovie previews in some kind of compressed format as well.)
But with AppleTV, it's simple. You go into export mode in iMovie, select Export to AppleTV, wait a while, and then drag the resulting file into iTunes. If you've set AppleTV up to stream from that computer, the 720p movie you've made will be available in the Movies menu, and you can stream it flawlessly onto your main TV.