This is a device I was excited about, but now, meh. iTV becomes Apple TV
No 1080 High Def???
Only 40Gb HD???
I like that you can connect computers to it to pull the media, but why a restriction of 5? Seems arbitrary to me (similar to the restriction within the Airport Express). A big question I have is does it stream media out, or does it support file based access over the wireless? I'd rather it just acted as a big hard drive for your computers, and streamed out (played) to the TV. But 40Gb? I can't get over that. That's nothing.
--- EDIT ---
Reading the keynote, it appears that the 5 computers are used as a source for Apple TV. And it appears you can sync data to it like an iPod (supporting smart playlists and everything). $299 USD, shipping in Feb.