My media-centre is my PS3, and it blows the Apple TV out of the water. In my opinion Apple really missed the boat with the

TV.
Apple should have looked at what consumers use their TVs for, and based the

TV on that, rather than try and force what Apple thinks they should be using their TVs for down consumers throats.
The

TV can be used to stream media, a very select and DRM'd portion of media at that, to your TV. Do people, by and large, use their TVs for this? Nope. Not at all.
People do a few things with their TVs. They watch over the air broadcasts. They watch DVDs/Blu-Rays. They play games. These are three things the

TV does not do! Why would the average Joe spend money on a "set-top-box" that doesn't really do anything you use your TV for?
The usually astute company that makes products people actually want to use have, for the first time, completely missed the point with the

TV. And this is why it's a dismal failure of a product. They saw it as a portal to shove iTunes down our throat, they didn't design it with the consumer in mind.
If I was designing the

TV I would have made it what the consumer would want. My PS3 is fantastic. With Play TV hooked into it I can watch and record shows like a TiVO. I can play DVDs and Blu-Rays on it. I can browse the internet, listen to music and look at photographs on it. Heck, it even has an application to tell me the weather and local news. THAT is what the

TV should have been.
It should have a dual tuner, allowing users to watch digital TV and record shows. It should have an optical drive so you can watch DVDs/Blu-Rays and rip CDs. It should have a light-weight browser so you can check the net from the comfort of your couch. Add in the iTunes streaming aspect of

TV and you have the perfect set-top box. But the streaming is an extra, not an essential and that's where Apple have gone wrong.
EDIT:
I've never heard such bull talked about anything for a long time. IMO, no, obviously there will never be a DVD or BD player in the Apple TV. There will furthermore never be a TV tuner of any description. Nor will there ever be an import option for DVD in iTunes.
If this is a problem for you, go and buy something else. Afterall, Apple is not forcing you to adopt their solution.
And this illustrates my point exactly. You, good sir, have pinpointed exactly why the Apple TV is such a failure. And why 99.9999999% of people ARE adopting other solutions.
Apple aren't forcing anyone to adopt their solution. The problem is, however, that they also aren't providing any compelling reason for anyone to adopt their solution. It sucks. If Apple's solution was any good then the Apple TV would be a success. So obviously they need to rethink their solution.
How well would the iPod have sold if you could only put iTunes tracks on it, and not your own CDs? Hmmm. iTunes content is a very small portion of what the average consumer owns. All their movies are on DVD, most their music on CD or ripped from CD. Apple may want us to get all our media from iTunes, however it doesn't work like that in reality and designing products around that is going to result in things like the Apple TV that are useless for 99.99% of the population.