It's too gimped in my opinion, but it might still be worth getting depending on what you want out of it.
I have a new samsung TV with DLNA, and that is so much better than the apple TV for streaming movies that it renders that aspect of the apple TV moot for me. The samsung itself will happily stream every video in my collection so far, be it .mkv .avi or whatever... and whats more it'll stream 1080p files too whilst the aTV tops out at 720p. If a new TV isn't on the table any time soon, there are a buttload of boxes that'll do a much better job as a media streamer than the aTV.
My aTV though is plugged into my home audio receiver via HDMI and it is just brilliant for streaming my music. I can either be sitting there with my laptop or iphone, select airplay and the aTV wakes up and starts streaming the music. Considering the other easy way to get this working is via an airport express which costs almost as much as the aTV, why not get the more capable box. Once they mature the video aspect of airplay into something more useful (eg, throw recorded videos from the iphone up onto the TV or videos from safari) then it'll most certainly be worth the small extra expenditure over the airport express.
Overall though I must say I'm disappointed... it could have been much better. App support, 1080p, and better access to content (for the uk at least) are all pretty necessary for it to really be worth it. Plus £4.50 or more to rent an HD movie is silly for a digital distribution medium in my opinion.