I have an original Apple TV (and thanks to the limitations of the new device I'll be keeping my old one forever.....hehe).
Anyway, I love the device. Renting/buying movies and tv shows is super easy and eventhough mine has a 160GB HD installed in it, I only use the build-in HD to store my pictures and music, TV shows and Movies I stream from one of two iMac computers also on the local network.
I also run an eyeTV 250 plus device in tandem with a turbo.264 HD on one iMac and an eyeTV HD device also in tandem with another turbo.264 HD on the second iMac.
The reason for my above setup?
- eyeTV 250 plus captures video from my cable connection (analog and un-encrypted digital) and the turbo.264 HD converts it to iTunes format for streaming to my Apple TV or to my iPad.
- eyeTV HD captures video from my satellite connection and the turbo.264 on the second iMac does the same as above.
essentially, all of my digital video content can now be in the H264 format (takes about 12 minutes to convert 1 hour of MPEG2).
I can set recording from either iMac or remotely via the iPad app, and when I come home sit down in the living-room where the only component now connected to the tv (the Apple TV) allows me to browse all recorded media on either of the iMacs. It took some time to research/gather all of the required parts for my scenario but my wife absolutely LOVES the new component/clutter-free aspect of our living room (ie. no more DVD, VCR, AMP, Satellite receiver, cable-box, etc. etc. etc.) just one simple lilttle box from Apple.
The other plus to this setup is, via 3G using the iPad eyeTV app we can watch live TV from anywhere. (cottage anyone? hehe)....... I watched some of the 2010 world cup soccer while sitting on the dock with a cold beer.......thanks apple! 
the Monk
EDIT: the eyeTV devices I listed above can be purchased either from the apple store or from the following website:http://www.elgato.com/