Right now the most logical updates in my opinion is a shift to the Intel Atom processor, since it may run far cooler than the current processor used.
A shift to SATA based hard drives. since its a a more compact interface, and sata drives are becoming cheaper than their older IDE counterparts. and it might allow for a higher capacity baseline, and high end, lets say 80-120 for a base unit, and 250-320 for the high end model at current prices
Possibly a new IGP, that is capable of running 1080p video...
And with the iphone's strength at gaming there may be a feasible chance of an appleTV appstore opening up with a few simple games (i'm not exactly expecting half-life to launch its way onto the appleTV). Though, that may require yet another interface update.