I have a WDTV and it's perfect for me, I rip my DVDs to the videoTS folder (ie 100% quality) and they play back fine on the WDTV all DVD menus, extra features, subtitles everything.
I did seriously consider the aTV but I couldn't work out how to have all the DVD/bluray extras in an organised way in iTunes (using the TV section wasn't an option because, well, you don't want to go to the TV section for a Movie do you?) and the fact I would have to have iTunes on 100% of the time for it to work put me off too.
so now I have organised folders on my HDD which I can navigate from the WDTV, and it's exactly like I got up and put the DVD/bluray into the player, perfect picture quality and perfect sound.
I have an iPhone and if I want a movie or tv show on there Handbrake can mount the videoTS folder and I can convert the main title on a 'as needed' basis, it would be nice to have have a 'perfect' library in iTunes but the WDTV just makes it so much easier and far less time consuming.