I disagree with the posts that state the various reasons Apple will not (or should not) enter the TV set market. If the stated reasons were that big of a hurdle, Apple shouldn't be in the desktop computer market for the same reason. They are and they are successful because they can provide hardware and software that's beautiful and easy to use, and for which many people can justify the extra expense. Furthermore, they enhance the functionality of many of other Apple's products - the Apple "ecosystem".
Now look at monitors. They are in the monitor market with their Cinema Displays. Yes, they aren't the market leaders (due to high pricing) and yet, they are able to maintain profitability. This is a product that doesn't really utilize (or be utilized by) the Apple ecosystem. You add in a computer and that adds functionality to the ecosystem and voila, you have the iMac. Furthermore, because of volume of sales, they are then able to lower the pricing to be much more competitive - to the point that there isn't much else that's comparable in experience for the price.
I don't know what the Apple TV is going to be yet, but I could see how they could build a set that with software built in that will add to the functionality of the ecosystem. e.g. If you have an iPod Touch, iPhone, iPad, or Mac, adding the TV set will make everything a little more fun/slick/easy to use. There won't be a single TV out there that will offer you a comparable experience for any amount of money at any size (above 27"). All of you joking about Apple's premium pricing are ignoring the fact that in the last few years, Apple products have been coming out at VERY reasonable prices. Who can argue that the iPad, iPhone, or Macbook Air are overpriced? Similarly spec'd competitor products cost about the same, and sometimes even more.
IMO, the biggest challenge for this rumored product is content. Without it, it's going to be an uphill battle and Apple will not have control over the market even if they make significant headway. With the content, success is virtually assured. With $80 billion dollars in cash, I think Apple will be able to make this happen by brute force if they can't convince the content providers to do so on reasonable terms.