Just to chime in:
I agree with HobeSoundDarryl's explanation, but just thought I'd add my own experience to corroborate the original poster's issue.
I don't have an iPhone 4s, but I have a Canon Rebel T2i which shoots 1080p movies that go into iPhoto by default. There is some interesting behavior here, which perhaps matches what you are seeing on the iphone 4s:
-1080p videos simply left in iPhoto, with iTunes photo-sharing and "include videos" box checked turn on, are available on my ATV2 through the Photos section. However when the video is selected to play on the ATV2, the wheel spins, the beginning of the video starts playing, but then usually the ATV2 throws an error or even reboots itself. This seems to happen for videos longer than 30 seconds or so. The shorter videos will sometimes play all the way through just fine.
-Those videos I have dragged into iTunes using the "option+drag" method (whereby the movie file itself is not copied, just the path to the movie file is given to iTunes) from their iPhoto directory play fine when viewed on the Apple TV in the "movies section". Let me be clear: When navigating to these movies on the ATV2 by going to Photos and seeing the videos amongst the photos, the ATV2 reboots or just crashes when trying to play the movies. But if you navigate to the movie in the Movies section (since it is now in iTunes), that version of the movie plays just fine on the Apple TV, without crashing.
This is especially odd because both the Photos section and the Movies section on the Apple TV are pointing to the EXACT SAME MOVIE FILE. There is only one copy of this .mov file on my mac: sitting in my iphoto library directories. iPhoto points to it, and iTunes serves that pointer to the ATV2, but it crashes when I try to view it on the ATV2 through the "Photos" section. iTunes ALSO points to that same .mov file, and ATV2 DOESN'T CRASH when I access it through the "Movies" section. This uncompressed .mov 1080p file has NOT been copied/compressed by iTunes (unless it is doing it on the fly), and yet the same movie file served to the ATV2 in two different ways plays differently.
I wonder if the original poster with the iPhone 4s videos can test to see if you see the same behavior with your 1080p videos?
-As expected, those videos I have simply dragged into itunes (NOT using option+drag), allowing iTunes to copy the file and compress the video, play fine on the ATV2. But now you have two copies of the same movie. Not great for storage concerns, since most people will want to keep the original, uncompressed movie file, so adding the compressed (albeit smaller) file is just extra wasted storage space. Storage is not SUPER expensive, but its expensive enough to be annoying.
TV version. The iPhone 4S is recording at 1080p. The 
