Wow. Lack of HD space was far from the main thing keeping me from buying a shiny new

TV
Much bigger factors:
1. Lack of support for discrete surround sound. (And don't link yet again to that ***** "top 10 myths" page. The

TV DOES NOT do proper surround sound, meaning it does not output anything other than a stereo PCM signal. Yes, it will do pass-through, just like the optical out on the mac, and yes, you can fake it with Dolby Pro Logic using the STEREO signal you will get from all of your QuickTime files, including the AAC 5.1 files, but that's not the same thing as encoding to AC-3 for an actual surround signal that can be used by actual existing hardware.) For a home theater device, the current state of affairs with audio on this box is absolutely pathetic.
2. Price. Let's face it, the

TV amounts to little more than a wireless monitor connector. A remarkable feat, in some ways, but why would I ever want to pay $400 when a $50 DVI-HDMI cable will do? Heck, it doesn't even supplant the need for a cable, because the

TV still needs to be wired to your monitor.
For less than $400, you could easily score an old G4 mini off Craigslist or eBay or whatever, more than likely already upgraded with 1GB of memory, which will play h.264 just as well, and will also do so much more.
3. Lack of format support. "If QuickTime can play it, so can

TV." Hey that's swell. But I've never quite been able to delete VLC off my media room Mac, because there are an a fair number of files out there which you flat-out can't use with QuickTime (even with Perian, Flip4Mac, and the AC3 patch installed), and a lot of other files which QuickTime does not play quite as well as VLC, for various reasons.
Also VLC offers a lot of that QuickTime perhaps never will: AC-3 and DTS support via S/PDIF, powerful de-interlacing options, switchable subtitles, multiple language tracks, etc.
4. Lack of media bay.
If I want to play a DVD from NetFlix, I just pop it into the Mac that is right there in my media room. If an

TV user wants to do the same, they either need to keep a separate DVD player hooked up to their TV along with their

TV, or they need to go into whatever room their computer is in to stream it. Lame.
5. Lack of analog video output.
The big media companies are desperate to "close the analog hole" by moving everything to formats which use encrypted digital video streams that go all the way to the monitor. It's one reason why HD-DVD and Blu-Ray are so slow to determine a winner: Few people want anything to do with either one of them.
If a media device can't output component video, or at the very least VGA, it's worthless for connecting to a great deal of the TV sets and projection systems out there.
Say it with me, children: A mini is a better solution than

TV.
Don't even try to tell me that the mini is "too expensive" for some people. We're talking about an HD media device here. Anybody who "needs" an

TV is usually going to be somebody who was willing to drop a few grand on an HDTV and a top-notch audio system to go with it. It seems penny-wise and pound-foolish to hook up that glorious home theater to such a limited device when a little more money (or a little wiser shopping) gets you so much more.
You can't even dismiss me as an Apple-basher, because I'm actually strongly advocating Apple products. Just not this one. It's completely inferior to another solution offered by the same company.