Apple describe the Apple TV as a hobby project, which begs the question of why they are bothering with it. And the reason they're bothering is because to not have a toe in your lounge means giving up a large segment of your media spend; video. Apple relatively recently refreshed the 1st gen device with a newer, sleeker, smaller version. I had the old one, and am now busy playing with a 2nd generation version.
The 1st generation device had a hard drive in it, and you could either stream your content to it from any computer running iTunes (the devices all have built-in WiFi), store the content on the device and have no computer running or purchase content from the online store (or, as was usually the case, all three).
The new generation device is smaller, black and not white and is functionally more useless than the first one. It has lost the hard drive and now has flash storage. Great if you're in an environment with very fast, always-on connectivity. That is not true of SA. Its also lost its USB port, and has the same miserable compatibility in terms of media playback (i.e if its not in iTunes, it won't play it).
So why buy it ? Because, if you've gone to the effort of sorting out your media so that it plays and looks great on your iDevice, you want it available in your lounge in the same way too. And yes, you could dock your device, but thats dorky. This at least can be controlled by remote, makes that big TV useful by displaying album art and can drive 5.1 sound through its TOSlink output (the HDMI audio out seems to be of inferior quality).
Oh yes, this new gen device also supports Airplay; that is quite cool. Imagine you have a pic or video on your phone; you can get it onto your TV simply by selecting the Apple TV as your output screen - neat! That is a cool trick. And shifting the price point too was smart - $100 is reasonable and fair for a hobby, the old one at $300+ wasn't.
