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I've owned this now for over a year and I must say that I have found it very good. Apple recently upgraded the software to allow you to rent movies through itunes provided that the Apple TV is connected to the internet via either the ethernet port on the back or using the in built wifi. The only thing that I would say is that at the moment the movies are somewhat limited in the number of titles available.
Provided that it is in a format that the box accepts, you can download home movies on to the box or stream them from your itunes library on a home network.
It will also stream your itunes music library so that you can listen to music through the television or through your home cinema system if you connect it to the box.
Apple have also recently introduced a new application for the iphone called remote which allows you to connect to the box and control the apple tv from anywhere on your wireless network. This means you can change tracks even if you are not in the room.
Additional feature include the ability to watch youtube on your telly.