It does tv streams from Hulu. At least in theory.
Also plays more formats. Don't know about iTunes integration, but http://www.boxee.com if you want to try the beta
TV streams from Hulu - interesting, but not a killer app to me. I have TV service, and a DVR. If I want to see something, I can see it. I'm not that into TV.
More formats - another minor plus - I can watch content from the iTunes store; I can rip DVDs and put them on the Apple TV if I want; I can put videos from my handheld camera on the Apple TV. What other formats do I need?
iTunes integration is more important than those things, and interface (which is unknown for this device) is also important.
As for 1080p - yes, I'd prefer that, too, but the main limitation for downloaded/streaming content isn't hardware, it's bandwidth. Until that's solved for, improving the hardware to work with 1080p will be of little importance. The only advantage would be letting you rip a Blu-Ray to the Apple TV at 1080p (and why not just play the Blu-Ray instead?).