I just noticed that since updating AppleTV to 2.0.2 and iTunes to 7.6.2 (not sure which one is responsible or if it's a combination) that I can now stream web radio stations to my AppleTV. I have a playlist of radio stations in iTunes and I've tried to play them on the AppleTV in the past and it just gave an error. Tonight when I tried it, they all played fine using the AppleTV interface (comedy, news, music, etc.). They show up both as an "unknown album" (why I noticed it as I wondered what that was in the album list as I scrolled down it) and the Radio Station playlist works too.
They've also worked for some time using AirTunes + iPod Touch running 'Signal' or Remote Buddy. Signal even brings up the album artwork for the song if it can locate it. But until the upgrade, they did not work from AppleTV's own interface (i.e. You had to use AirTunes to stream it.)
I've informed Apple of a bug I ran into that's still present in the current software. If you have the screensaver set up to kick in and you're viewing photos and hit pause (say to examine a photo, make comments to guests, etc.) and the screensaver kicks in while it's paused, it will completely lock the interface (screen goes black and no key works; you have to pull the power plug to force a reset). I hope Apple will fix this bug soon. I've also noticed since the software update that the screensaver kicking in during music (say after 2 minutes) often stops the music when it kicks in. It never used to do this under 2.0.0 (I skipped 2.0.1 so I'm not sure there).
Meanwhile, I would really like to see some visualizer options in a future software update to AppleTV. I've got a 93" screen with an HD 720P projector and it would be wicked to have a good visual effects thing going while playing Pink Floyd or the like.
It should have an option to SEARCH *your own* music (not just iTunes STORE music).
A monthly flat fee subscription for unlimited tv and movie rentals would be nice. I almost never rent or buy older movies and/or tv shows because it adds up quick and I don't think it's worth it (usually just rent newer HD movies). But if I could pay a flat fee (Netflix style) and rent/view all I want, I'd probably go for it if it was reasonable.
A browser option would be nice (yeah I know you can hack it to install one, but it should be an included feature, IMO given a Nintendo Wii even has Opera on it). My 93" screen in HD would make a handy browser display window. An iPhone or iPod Touch would make a nice keyboard text entry device to run such a thing on it. In fact, the iPhone and iPod touch with the addition of a WiFi Infrared transmitter device mounted near the stereo system could turn them into the ultimate Universal Remote controls for your entire home audio/video system with easily mapped visuals for every remote function. Given how much some of the pricier touch screen remotes, etc. cost, I think it would be a pretty reasonable alternative with say an iPod Touch. I personally use one tethered to an AC cable so it doesn't drain the battery on my dedicated system upstairs to control the music selection on that hifi system. It works great using Signal or Remote Buddy. It should work even better with the new 2.x upgrades.
I've got a Canon A590 digital camera and it records video in AVI format. I wish I didn't have to convert it first to display it on AppleTV under my movies. There's no good excuse for Apple not including major standard formats like that. This device should be convenient for ME not convenient for pushing Apple formats. It takes Handbrake forever to convert long movies (relatively speaking).
TV shows should be available in HD (SD sucks by comparison on a big screen and even my cable company now has 35+ HD tv stations to watch!) and there should be a RENT option for tv shows (I don't normally want to watch a tv show episode over and over so why make me buy it? How about a 99 cent rental for tv shows?
It'd be nice if iTunes could be told to play certain albums ONLY on certain devices (e.g. I have several DTS CD albums and it's fine if they play on my downstairs home cinema system which will recognize and decode them automatically, but not fine on my computer or upstairs stereo system which don't have decoders on them)
Remote Buddy lets me view my Mac's web cam remotely on the iPod Touch. It'd be nice if AppleTV had a similar function on it and/or to view WiFI web cams (thinking along the lines of security cameras mounted around the house).