With the update to 2.3, Apple introduced the ability to use 3rd party remotes. I guess they tweaked the IR sensor sensitivity too. A lot of people reported the remote becoming sluggish after the update and someone took a digital video camera and pointed it at their screen and saw that it was giving off a lot of IR noise. Whether this was the cause or not, putting a piece of paper in front of the ATV IR sensor cured the problem for me. I think there are a lot of LCD screens that give off IR (mine is a samsung) - it happens for about an hour after the TV is switched on. I haven't checked whether Apple fixed it yet, cos recently my TV has been on for a while before I use my ATV. The bit of paper is gone, so I'll see soon, but I've heard it's fixed.