Yeah, refreshing the Apple TV hardware specs and adding in an App Store would seem like a really smart move . . . iPhone apps designed to scale-up for a tablet could perhaps also be scaled up for a full-sized TV screen, giving users a single iSlate + Apple TV app store where they can purchase apps/games to use on all their Apple devices.
With every game console having some degree of multimedia-management now -- even the Wii is about to allow for Netflix streaming -- and non-gaming set-top media devices like the WDTV Live allowing you to access all sorts of media from your network or a hard-drive for easy playback on your TV, the Apple TV has fallen behind the times, being just a spruced-up old-school Video iPod for your TV. But if people could use apps and play games on the Apple TV, then Apple will be cutting right into the game-console market with a family-friendly, multi-purpose device. . . . Essentially an iPod Touch for the family TV. And iPhones/Touches could act as super-remotes and game-controllers for the Apple TV apps/games.
Plus, maybe then you'd see Apple open up the platform for some really cool Apple TV apps - like Boxee/Plex/XBMC, Netflix, eyeTV, and Skype/Google Voice <cough,

> apps. This would allow Apple to maintain some control (app-approval process, $$ from app sales) while opening up the Apple TV enough so that we'd no longer be forced to hack it to get it to do everything we want it it to do.
With the right upgrade they could keep the costs down while still making the Apple TV consumer-friendly enough so that everyone would want one in their home, in the same way that everyone's got an iPod/Phone/Touch/Nano. It'd be as all-ages friendly as the Wii and as media-useful as the upcoming Boxee Box -- a potential market dominator that could be even more successful than the much-hyped iSlate tablet, which it could none-the-less integrate with in many ways (use the iSlate to browse TV schedules; control games on the TV, sync apps between the iSlate and the Apple TV; etc.).
That said, I'm excited about the iSlate, and I won't be holding my breath when it comes to waiting for Apple to finally upgrade the ATV. At this point, the iSlate seems more likely than a really useful Apple TV refresh. But we'll see

(Personally, I'd probably just lust for an iSlate for a few years before buying one. But if Apple made an Apple TV that could everything it does now + allowed apps so that it could do what the Boxee Box promises it can do without having to hack anything + can play some simple iTouch-style games -- all for less $$ than buying a Mac Mini -- I'd buy it immediately; I think a lot of people would.)