I recently received the AppleTV that I ordered about two months ago at work. The size was surprising– it's shorter than a Mac Mini but wider and longer. The first problem I ran into is I don't have a display at work with component or HDMI in on it. So I connect my composite TV monitor to the green component output to at least get some idea of what the OSD looks like. This resulted in a black and white image (and this worked because sync is also on green).
So I took it home over the weekend. I had to update iTunes to get it to connect together. All content stored in iTunes is available to the AppleTV (provided your computer is turned on) and it can pull content from multiple machines in your house. It will play anything an iPod can and won't play the things an iPod won't. So, no streaming your VIDEO_TS folders to it.
I'm not 100% into the whole iTunes-as-your-video-organizer yet so I had to add a few videos to my library to get a sense of how it works. And it works well, the video looked great and it never stuttered while streaming (I was connected via 100baseT ethernet).
Time will tell what the USB port on the back really is for.