Apple will probably just want to make the ipod games work on the itv. Games like bejeweled and zuma. It wouldn't cost too much extra to add that ability, and it wouldn't really be competing with the big console makers. It's just a "testing the waters" move that has little downside.
If they leave the system backdoor open for easy programming by users, we could see XBMC media center ported to it quickly. And a port of all the Mame games. And Bittorrent clients, etc.
Just provide some upgraded versions of the iTunes games and let the indies do the rest. Just don't DRM the unit or lock the indy developers out.