I've been reading a few posts going back and forth here and I think that some perspective needs to be maintained...
Hey newbie, thanks for being a smart***. Great way to start around here.
My point is that you don't need an

TV to do any of the things you suggested. You can view those things on your computer screen, or you can hook your laptop to your TV if you really *must* have it in your living room instead of whatever room you keep your computer in.
You don't *need* a laptop or a TV, either.
Semantics aside, nobody here seems to have genuinely confused the AppleTV or any class of products remotely related to it as being on par with shelter, food or toilet paper.
Given that, the impetus for purchasing an AppleTV is based on the same kind of desirability, not necessity, factors as any other product that isn't strictly essential to survival in its simplest terms.
Knowing that, let's simply say you are an individual who likes to watch movies on your computer or you don't mind hooking up your laptop to your TV. I get that... and I get that you're not really who Apple's targeting with this product.
And your reference to the ipod is just oh-so-clever. Clearly, given that the ipod was wildly successful, everything else apple ever releases will be as well, even products that do entirely different things and target entirely different markets. (see? I can use sarcasm too! How impressive!

)
I happen to have a management background with an academic emphasis in marketing, and I'm presently a financial analyst so I'd like to speak to this...
iPod is successful for the same reasons AppleTV will be successful... because both are products that apply three principles:
1. Careful study of human use of technology - Apple puts extensive research into not just how we use technology, but how we naturally interact with non-technological items in the real world. Features such as scroll momentum in the iPhone aren't imitations of existing behaviors of technology, but physical behaviors in the real world that add layers of feedback into the design that the human experience expects from real-world objects.
2. Industrial design - The two most important words in Steve Jobs' vocabulary. Industrial design translates to form IS function. Very few companies get this right on the first try. Apple is one of them.
3. Customer input - Apple's product engineers on the edge of a new idea shape that idea into something useful by way of the feedback received on similar products. iPod is really an evolution of various technologies Apple already had in place, beginning with Quicktime, taking advantage of firewire (something they made standard on a PC before anyone else), giving mobility to iTunes and incorporating the UI in a way that makes the iPod a more elegant and therefore more usable solution than other MP3 players on the market.
And contrary to your assertion... the iPod and AppleTV are directly related... in that they are both devices that address the mobility and interconnectivity of media/content. The computer network, in this time of technological convergence, is becoming the ubiquitous backbone of home entertainment and AppleTV bridges the gap to the living room... That gap which you deem insignificant is actually the biggest hindrance to wider adoption of consumer purchasing of media over the internet.
Apple clearly paid attention to the market research that supports this from various financial analysts and tech research firms, as well as their own internal analysis of external feedback from ideas and feelers they put out before they bring new products/features to market... and their timing couldn't be more perfect, given the formidable growth of HDTV ownership this past year, the expansion of internet distributed content, decline in flexible-format media storage (HDD, flash, etc.) and increase in consumer demand for on-demand a-la carte content.
Don't talk to me about ipods. I had a 1st Gen before 95% of america knew what they were. My family and friends thought I was nuts, that I was taken by another apple product that nobody needed. I disagreed because the usefulness of the ipod, the need that it filled, was clear. The ipod filled a need that genuinely existed - people had been trying to carry large amounts of music with them for years, and it usually entailed a CD player and a big book of CDs.
And I wrote a research paper on the internet distribution of music and video in 1996, the same year I began recording and mastering professional audio on first generation Power Macs.
So there you are.
I don't see that usefulness or need here. I've never had the slightest desire to display album art during a party

rolleyes: ), show my family photos on my tv, or blow up video podcasts on a big screen. I see the

TV as a device that you're trying to think up uses for, not one that does things that people actually wished they could do prior to

TV's existence.
That said, if you want to spend $300 to move content, which you already own, 2 rooms over, go ahead.
Well, let me offer that AppleTV didn't come about by throwing darts at a wall.
In fact, it is the result of Apple's 20+ years in digital multimedia, an effort that really began with the inclusion of 8 and then 16-bit sound in the Macintosh.
Since then, evolutions in product design have been leading up to today... Bernstein Research projects that TV episode downloads will expand to nearly 500 million in 2011 up from 41 million in 2005. Movie downloads are expected to grow to 213 million from 1.6 million in 2005 according to Adams Media Research.
How Apple came to the design of the AppleTV is a combination of external data as well as the field research of their own product engineers. I know a former product engineer from Apple. He explains that after Jobs' return, product engineers would put ideas before consumers, vendors, businesses, analysts, etc. which are often extensions of existing technology... to try to identify what they like, don't like, want to see, etc.
AppleTV is the kind of product that is the result of a combination of Apple's own ingenuity at redefining technology combined with some of this field data to help shape how that product took form. Again, not throwing darts at a wall.
The fact is, and research supports this, that a huge number of consumers want to be able to download movies and television episodes off the internet AND view them on their TV. Apple has developed a solution that bridges the gap in a simpler, more elegant fashion that appeals to the average consumer.
Now, I know that you're going to say "But connecting a computer to the TV isn't that hard"... I agree, but then I would consider myself quite technologically literate, and yet even I think this is not the most elegant solution. I would rather it be a wireless solution and in my case it's for some additional reasons the average guy might not have.
The average guy may find a wireless solution simply elegant. I find it also economical because I have not one but four computers, and content spread across them, across 500 gigabytes of collective hard disk storage over the network. I do not want to move these computers into my living room, thank you. I have a computer room and that is where my computers, external drives, peripherals, monitors, NTSC reference monitors, DAT decks, 24-channel audio I/O, synthesizers, and audio/video postproduction software resides.