I, for one, don't think the ATV needs a hardware refresh anyway. I think it is an all around great product as-is and don't really crave any additional features.
As for storage space on the ATV itself, I stream everything from my iTunes library, so the first 40 gb of the device fill up and everything after that just streams from an external drive connected to my iMac. I have over 200 movies+tv shows, and this set-up is absolutely fabulous. No complaints at all.
I agree to some extent but more storage is always nice. The main problem of the Apple TV has never been hardware but software. The Apple TV needs the App Store and movie/TV show subscriptions along with the option of watching some shows/channels for free with commercials. Apple should be trying to replace the cable box and not strengthening them by adding a Dvr as some have requested.