I bought my AppleTV about a year and a half ago and recently sold it. I decided I couldn't live with its limitations any longer and Apple doesn't seem to have any desire to actually improve the device.
I bought a used 3.4GHz Pentium 4 HT microATX desktop computer and upgraded it with 2 gigs of RAM, ATI Radeon 2400HD video card, Soundblaster Audigy 7.1 surround sound card, and full wireless keyboard with built-in trackball. It came with a 400GB hard drive and dual layer DVD burner. Total cost: $200. Less than the price of an AppleTV.
The difference in user experience is incredible. Boxee on AppleTV was unbearably slow, almost to the point of being unwatchable. Boxee on my HTPC is an absolte thrill. I've had zero problems getting Boxee to play with the video and sound cards. I installed a 1TB internal hard drive and copied all of my video files to it, clearing lots of valueable space on my iMac. I can easily run iTunes to stream music files and download and rent movies from the iTunes store. And since it has a full web browser, I can access things like ABC's online HD programming as well as HULU's HD library. I can also access full netflix. I can play DVDs in the DVD drive without having to rip them. 1080p support. All of this without having to do any hacking, patchsticks, or anything else like that.
Selling my AppleTV and replacing it with an HTPC was one of the best decisions I've ever made, and it has substantially improved my home theater experience. AppleTV's main limitations are lack of full web browser and unbearably slow speed. Unfortunately, it does not appear that Apple is interested in breathing life into a fading platform