I've had an AppleTV for roughly a year now, and my experience has been pretty good. However, I'd not got so far as to say the device "just works".
Here's a short list of the problems I've seen (unit software is kept current):
1) AppleTV frequently (~every other day) wakes from sleep for no apparent reason. I'll put the unit to sleep (it remains quite warm while asleep, so I'm not sure if there's any real advantage to sleeping the device) when I go to bed and it'll be "awake" when I glance at it in the morning. It will have highlighted a different menu option than I had left it on, which makes me wonder if it reset itself in the night. No, I have no pets or kids that could be fiddling with the remote while I'm away.

2) AppleTV will occasionally (~once a month) claim I have nothing in my library. The real culprit here is iTunes. Clicking 'Sync' does not fix the problem. After restarting iTunes, the AppleTV will see everything just fine.
3) AppleTV performance will decrease over the span of a couple months to the point where audio will continue playing, but video will hang for 20-30 seconds when initially playing a file. When it deteriorates to this level, a reboot usually fixes it right up. (NOTE: I seriously dislike that there's no way to reboot the unit other than pulling the plug.. which is just about the WORST possible way to power down an electronic device!)
So, no, I don't think it "just works" at all. Not by a long shot. BUT, only 3 relatively minor problems (design flaws notwithstanding) in the span of a year isn't too shabby. If it were a Microsoft product, I'd have had to send it back twice and reload the OS 4 times.

All of that said, my setup might be a bit different than other 100%-Apple environments.
AppleTV, hardwired via gigabit to a Vista64 server running always-current iTunes hosting library from a large RAID5 array. HDMI out to TV, also optical audio out to receiver. (I haven't upgraded to an HDMI receiver yet)
My AppleTV is not hacked, and I do not purchase content from iTunes. I only play Handbrake rips of DVDs that I own, or mp3s I've ripped from my CD collection. In other words, my dataset is consistent and is not HD.