Apple have already announced that the first generation Apple TV will see no more updates, so whilst I agree with you (I have two of the original Apple TVs), it isn't going to happen (which is why I went out this morning and bought a 2nd generation one)
First Generation Apple TV will not work at all with AirPlay from iOS devices (neither sound nor video), but will continue to work through iTunes on a PC / Mac as it always has.
All revisions of Airport Express (G and N) work with AirPlay on iOS devices for streaming Audio
Second Generation Apple TV with the latest software update will work with AirPlay from iOS devices for sound and video from the iPod app and YouTube, but with audio only from MobileMe gallery videos and streamed videos in Safari. It will stream audio from pretty much any source