Okay, I have been reading all this information from various sites for a while now and I think it seems the big picture of the whole ecosystem is overlooked.
To start off with the 720p vs 1080p is not a big issue in my opinion. The reason for this is because you have to look at the apple ecosystem as a whole and the benefit of that. IF you buy a HD [720p] movie from iTunes. Your able to access and watch this same movie (due to the fact a SD version is included also) on virtually any apple device and pc. You can play it on your

TV,

ipod,

Mac, iPhone, iPad, and last but not least Windows PC's. Meaning you buy one piece of content/movie and you can virtually have it anywhere with you. The reason there staying 720p is for compatibility sakes, they don't want to start having to say: Device A, C are supported but devices B and D are not. Where as as it stands now, Device A,B,C,D are all supported. Now I have a few HD movies, purchased through iTunes, and the quality is pretty good. Sure there are better things out there. I know this for a fact. I also have a popcorn hour and many 720p / 1080p rips of some bluerays that I have. I would say that iTunes HD is not as good as some of those persay, but for convience/quality. It's pretty damn good. If your a true videophile/audiophile yeah it probably isn't good enough. (I have a 42" 1080p LCD HDTV, not a top end model but decent)
Like I said the big part of it is the ecosystem and it all working together pretty seamlessly. My only gripe with it really is the DRM (also prevents using like boxee to play the media instead). But all things considered thats not really that bad if you think about it as that allow you to set it too 5 computers. But that doesn't have a limit on other devices, as long as they sync to one of those 5 computers. meaning I could have a streaming

TV in every room of the house and never have a problem with the limit, I could even setup a computer at a relatives house and use one activation and potentially allow them stream to every room in their house because

TV's don't count towards the activation/licensing.
Okay this is about the whole cloud people keep talking about it and using to much bandwidth. I for one think it will be an assisted cloud. What I mean by this is that my itunes library at one point was 500 + GB after encoding all dvd's and hd video I could. But this cloud assisted library would most likely be for only purchased content. Point number one being that number alone that I have is way to big to ever conceivably fit onto current

TV and who knows how much it will grow in the future. So the new

TV would work just like the current one, and how I use my library is from streaming from my Mac! The whole idea with the cloud storage I feel would be for more mobile usage and only paid itunes content. If your on the go and say you own 50 GB of iTunes paid music (I realize thats a lot of money), that will not fit onto your 16 GB iphone now will it? So this is where streaming comes into play, where iTunes Cloud would allow one to stream all music/movies/videos/etc purchased from itunes to stream to your mobile device. Obviously you'd have intelligent sync at home so that way the most listened to content is stored on the device itself. But this is how I see the cloud storage working, you keep it all locally at home via download, but can stream from the cloud when mobile!
And lastly about the new device and people saying there are better solutions out, roku/ps3/xbox 360/vudo/etc. I don't think there is one that gives you as many options. Buy a movie from xbox 360 zune market place, can only watch/view on your xbox that I know of (I don't have a zune so I could be wrong, so it may be able to watch it on a pc? or zune ?). Buy a movie from the PSN download store in HD. Only watchable on PS3 (maybe psp again I don't really know). Or buy a movie on vudoo and only viewable on vudoo! I don't know about everyone else but I see a huge trend your locked into each platform. Now thats not to say it isn't the same for iTunes. But iTunes allows one to watch it virtually anywhere while as your stuck on vudoo, on just your tv if thats what you get which just Sucks!!!! Now for the whole netflix streaming, it's pretty sweet but there are problems with content providers with it. Some movies not available for streaming or they publishers could decide to pull there content anytime. At least with itunes if I buy it and download it, and for whatever reason they pull say music or movie from itunes for purchasing. I can still watch it cause I still own it much like a DVD or blueray because I have the file still (like a physical disk). Now thats not to say Apple could shut down all DRM activations and etc and really screw you over, but at this point I would find that highly unlikely compared to when Microsoft did that with there Playforsure or whatever DRM it was called.
So for purchasing digital downloads, I really see iTunes as the best in the current market. When looking at all the aspects. If the new

TV will run apps then I'm sure we can expect netflix/Hulu and more to show up on it.

.
I gander at my writing and see that wow this was really long, I don't know how many people I could expect to read the whole thing but this is my big take on the whole situation. I have some more thoughts on it, but for now that's enough for one post lolz.