I wonder how they would split the AppleTV into multiple models bigger hard drive is the only thing I can really come up with.
It's an interesting question - not because there're not plenty of ways to expand, but because it's difficult to keep with the "SIMPLE" philosophy and expand at the same time.
For instance - it'd be really easy to release a MacMini with HDMI/Component out. Based on today's specs - double the price gets you bigger hard disk and ram, 4 times the processing speed (but integrated graphics), and a DVD drive - is that worth it to most people? The posters who seem to like that idea are wanting it for its expandability and to double as a computer, not for is native functionality.
And alot of other functionality doesn't really need a different AppleTV, just a software upgrade. eg: Web access, 5.1 sound, external USB hard disk, DivX support, widgets, iTunes purchasing, remote desktop.
Another way of looking at it... if there are a range of AppleTVs, where does the existing one sit in that range? Is it the high end like the widescreen iPod, or is it the "regular iPod", the Nano, or the Shuffle?
I'm going to approach it from the angle that the AppleTV will attempt to displace ONE other home theatre component. And for now, I think that's the DVD player. So my bet - AppleTV 2 with bigger hard disk & dvd player.