I use 160 GB Apple TVs in my media room, bedroom and keeping room. We have burned (using handbrake) over 600 movies that we own. I have 6 TB of storage on my Mac Pro that we stream from. I used to use a wireless N router, but had to switch to a wireless G when I moved into my new home (pre-wired with an On-Q wireless G router, and the WAP are all rated to G only). Before I bought the Mac Pro, I only had a 17" iMac with 120 GB of storage. I quickly filled that up, so I bought an external hard drive (1 TB) to store movies on, and connected that to my wireless router. This worked great, but the hard drive (a Western Digital) was unstable, so I would sometimes have to reset the drive (turn it off and back on). That was a pain in the neck, especially when you were showing off the cool Apple TV to your friends. I prefer the set up I have now. I actually only use 4.5 TB of storage, and have a raid card on the Mac Pro to protect against loss of one of my drives. The time it takes to burn a movie (about 40 minutes for a 2 hour movie using handbrake) made protecting it very important to me. I own a Network Attached Storage Device that I hook up periodically for a Time Machine back up, and then I store that off site (at my office) in the event of a problem.
I bought the Apple TV because I was moving into a new home, and had looked into a home theater system. As you can tell, I own a lot of movies; one essential component was a system to make finding and watching those movies easier. Discs get lost and damaged, especially with a 4-year old at home. I didn't like the 400 disc DVD changer for a few reasons: 1.) it wasn't big enough to begin with, and I would have to daisy-chain two changers together at a cost of about $350 per (and that was for the cheap ones) 2.) even with the DVD changer (I own 1 already), you had to have a list of where the movies are in the changer, or go through the laborious process of manually entering each DVD name into the machine 3.) at the time, my son couldn't read; he would pick movies he wanted to watch by what the DVD case looked like; with a DVD changer, you could save the disc image, but you could only view it once selected, which was way too slow for my son, so we kept all of the cases on a shelf so he could browse (an annoying problem to have empty cases on our shelves). The Apple TV lets you add the movie poster (I download them from Amazon.com into iPhoto, then add them as images to the individual file through iTunes). You can also list actors, movie synopsis, reviews, whatever for the file you want, all of which is viewable as you are browsing the movies. You can quickly scroll through your movies by a couple of options. You can simply scroll by name; even with 600 movies, the Apple tv gets from 13 Going on 30 (the first movie in my list) to Zoolander (the last movie in my list) in about 20 seconds. Like your iPod, the scroll feature speeds up or slows down dependent on the length of time you press the up or down button. You can also sort your movies my genre, and then scroll through your movies by name (that way if you want a comedy, you just scroll through comedies). There is another system that will do what the Apple TV does, and frankly laid the legal groundwork for Apple TV. Kaleidoscape developed technology to burn the discs to a hard drive several years ago. They were sued by Sony Pictures, and lost their case. The courts ruled that people could legally make digital copies of movies they had purchased. Kaleidoscape makes a great product, but their 500 GB system costs $10K, without set up. A typical 6 TB system (complete with installation) run to three televisions would cost upwards of $50k
too rich for my blood.
Apart from loading your own DVDs, you can also purchase movies on iTunes. You can rent movies too, available in HD and standard definition. The rentals cost $2.99 for a SD movie, and $3.99 for an HD movie (there are occasional $.99 specials as well). You cannot at this time purchase HD movies. There is a beta version of Handbrake that will let you burn Blu-ray discs, if you have a Blu-ray drive on your computer. Movies in blu-ray take up about 20 GB each, and they also transfer slower. If I am watching 2 HD movies on 2 separate apple TVs at the same time, there can sometimes be pauses in the playback. I would recommend transferring HD movies directly to your Apple TV to avoid that. One note about rentals, you have to watch them within 30 days, and you have 24 hours to finish watching them from the time you start them. In addition to owned and rented movies, you can transfer home videos to watch as well, or just stream them from your computer. You just have to add them to your iTunes library (I do this through iMovie).
In addition to movies, you can watch TV shows on your Apple TV. Like movies, you can load your own (I have loaded all of Arrested Development, Seinfeld, Northern Exposure, among others) through Handbrake. Each TV show is sorted by either show title or original airdate. We sort ours by title. When you select Seinfeld, the seasons are broken out inside the category. Each separate season has a separate picture to help you differentiate season to season, but it is also listed alpha-numerically. One pain in the neck when burning TV shows is that you have to name each episode, or they all show up as "Seinfeld" or whatever the show name is. You can find episode names by googling your shows and finding fan sites. You can also purchase TV episodes and shows. Many are available for purchase in HD. You cannot rent TV shows.
In addition to movies and TV shows, you can also transfer your music library and playlists from iTunes to listen to (and watch in the case of videos). You really don't need to waste space with music on your Apple TV, music streams flawlessly, even when streaming movies on other Apple TVs and watching or listening to something on your computer. Like movies and TV, you can purchase music and music videos through the Apple TV. All purchases made on your Apple TV are transferred to your computer as well, and show up in a playlist called "Purchased Music on Apple TV (or whatever you have named your Apple TV).
My wife's favorite feature of the Apple TV is the photo feature. In fact, she never turns the TV off in the living room, because she likes it featuring our latest photos in a screen saver it runs if paused for more than two minutes. You can transfer any or all of your photos in iPhoto (I'm sure it transfers from a Windows equivalent as well) to your Apple TV. It will only display those pictures you have transferred. It will run a slide show if you would like, and you can even set what music you want it to use for the slideshow. There is even a feature that you can pick the song, and the photo album, and it will display the photos in time to the music. It actually makes slideshows worth watching.
As someone else mentioned, you can also look up
YouTube posts with your Apple TV. It is nice to be able to watch some of those on a bigger screen.
Hooking up an Apple TV is easy, but it does require an HD ready television. You can run it with component cables directly into your television (there is an optical digital out as well if you have a digital surround sound system). The preferred method is simply to use a single HDMI cable. Any standard universal remote can control the unit, or you can use the included Apple remote. As an interesting side note, the Bose V20 and V30 is incompatible with the Apple TV (neither Bose nor Apple can figure out why), though I use my television as the video switch in the room where we have our V30, so this is not a real problem for me.
As you can tell, I cannot say enough good things about the Apple TV. For $1,200 in Apple TVs (remember I have 3), and about a $4,000 Mac Pro (most of the cost is in the hard drives), I have created a home theater system that does more for much less than any other comparable system. We have found that we actually watch the movies we own in our collection now, as opposed to owning them and never seeing them, so forgetting about them. I think it is a great system. Even f you just want it for one room, and only have a few movies (you can load about 40 movies directly onto the 140 GB hard drive model), I definitely recommend it.