i found the AppleTV to be way underpowered. I had movies on an external hard drive, connected via USB to my Time Capsule, which was wired to ATV and wireless N to macbook. When I attempted to stream on the ATV, the movies would freeze.
People say to hack it, but I found that to be unreliable. I was having to restart my ATV almost every time before I used it.
You will not regret getting a Mac Mini. you have an extra computer and it is essentially only a couple hundred more than an AppleTV + harddrive upgrade. If you have an iPhone or iPod Touch, you can use an app to control the mini from your couch.
Also, you can control the mini, via screenshare, from any mac in your house. Unless money is your concern, don't think twice and get a mini. Even if money is a concern, save up and get a mini.