Heres the setup guide:
http://manuals.info.apple.com/en_US/Apple_TV_2nd_gen_Setup_Guide.pdf
You dont need iPhoto.
"If Apple TV isn’t playing your photo albums or slideshows
Make sure you have photos in your photo library or in a folder on your computer.
Make sure Apple TV and the computer you’re using are set up for Home Sharing. See “Setting Up Home Sharing” on page 17.
Make sure the photos you want to share are selected. In iTunes, choose Advanced > “Choose Photos to Share,” and then select the photos you want to share."