There are dozens of great reviews of the Apple TV out there. I echo Walt Mossberg’s review: just worked, streams like a dream from any computer in the house, and finally offers my wife a way to use our digital content without me around to help. I have some additional observations:

• The kids love the photo slideshow feature. So cool to setup a slideshow without hooking up a computer or firing up iPhoto, etc.
• I can’t believe that iTunes offers no easy way to move items from one machine to another. Now that our media collection is nearing vast sizes, I’m amazed I can’t sync iPhoto across two machines (while picking up photos synced to one but not the other, etc.), decide to move a TV series from the home server to the laptop (without jumping down to Explorer / Finder), and so forth.
• I’m really disappointed they released the Apple TV half-finished. You can see what the top items at the Apple Store are, but you can’t buy them. Nice.
• Way too klunky to share media from multiple machines with the Apple TV. I can only move items to the Apple TV from one computer, which stinks, and you have to explicitly chose which computer to stream media from — there’s no consolidated view of all media in the house.
• The Apple TV doesn’t support at least some of my Audible files. I haven’t looked into whether these are Audible’s non-MP3 wrapper types (Types 1-3 if I recall…)
• The UI seems… weird. Front Row seems more refined in some aspects. For example, the Movie Trailer UI in Front Row shows you rows and rows of movie posters for all the trailers. In Apple TV, you get a list that you have to scroll down, and only see one movie poster at a time. I think the new Windows Media Center UI trumps Apple TV pretty handily.
• A shame that in the quest for simplicity, the Apple remote doesn’t do much useful. I have to have at least two remotes to use the thing as the Apple remote doesn’t control audio. This is an area where Apple made the wrong trade-off.

All-in-all, I’m happy with the Apple TV, despite the trade-offs, and look forward to further software updates.