It's so sad to see the same old, tired, "720p is better than 1080p" arguments are still persisting. Most of the rationale will work just as well with SD (480p) vs 720p or VHS (320 x 200) vs. SD. Based on how far you sit from a screen and/or the size of the screen, the human eye might be unable to see the difference between SD or VHS quality and 720p but no one (here) seems to make that argument very hard. SD or less requires less internet bandwidth than 720p and less hard drive storage. It even comes with an added bonus in that it costs less than the 720p version via iTunes.
720pers please note:
- a 1080p video downconverts to 720p in pristine form. You lose nothing with a higher resolution file being squeezed down to a lower resolution screen. It just doesn't work the other way (meaning those who believe they can see a difference- or actually do see a difference- could get what they want too with no loss to you), AND, (perhaps) MORE IMPORTANTLY...
- Apple has finally embraced 1080p over 720p as evidenced by the choice of video camera resolution used in the iPhone 4S. If Apple believed in any of the tired rationale for 720p over 1080p, why did they put in that "overkill" (that will probably also go into the next iPad too)?
Apple has turned this page... maybe not with the

TV (yet) but it should now be only a matter of time. People shooting 1080p with iPhones won't be thrilled at seeing it downconverted via

TV forever.
Personally, I expect a 1080p

TV
this year- hopefully sooner than later. And my money awaits it, probably buying 2 or 3 as soon as it is released (I know for certain that I'm not the only one waiting). 720p was pretty good when the original one came out in 2007. It's 2012 now. Just about every other piece of HD video technology has embraced "full HD." Finally, Apple is doing this too.
Those that cling to "720p is good enough" arguments need to be ready to rail against Apple when Apple rolls out a 1080p

TV. But why do I think the bulk of the 720per crowd will be gushing ("my credit card is ready", etc) about the quality of 1080p as soon as
that 
TV comes out?
That said, I think it's great news that this little box is selling in those volumes. Maybe it will get a little extra attention from Apple so that it can become a much greater seller. From my perspective, the big 4 are:
- 1080p playback (you 720pers could still enjoy your 720p to it's fullest on hardware capable of playing back better than 720p). Get fully toe-to-toe with the max video output capability of Blu Ray so there are no superiority arguments pro Blu Ray vs. this little box. I perceive that's 1080p 60fps at (BD) max Mbps playback.
- Apps- the stuff that Apple doesn't want to do (or put resources toward doing) could be done by third parties. Look at what the jailbreaking crowd is doing in an unsupported, hidden (from the iTunes store) way. Just imagine how much more could be done.
- Normalize that USB port (or add several normal USB ports) so that those who want local storage can just hook up whatever size of local storage they desire so they can turn off that computer (or take that laptop with them). Building in local storage can't work because no chosen capacity is the right capacity for everyone (and some don't want to pay for local storage). Normal USB port(s) might also open the door for third party hardware + app combinations (for example, for those wanting BD or DVR functionality, maybe companies like Elgato would step up and offer that)
- Embrace the major audio standards- To fully compete with the "bag of hurt" it needs to ALSO match up well on the audio side. That means it needs more than DD 5.1 playback. The lossless and DTS standards common on Blu Ray should work on this as well
There are a few others. Personally, I would love to see analog audio output so that many Zone 2 receivers (that only work with analog audio) could work. And personally, I'd pay a lot more for
THAT 
TV described above (though I completely believe that all that could sell for just about the same price as the existing unit- look no further than the pricing of many other little

TV-like boxes that offer such benefits).