Rumour has it (from Engadget) that the next version of the Apple TV is going to run iPhone OS, have an A4 CPU, limited storage (16GB flash) and output 1080p. And it'll sell for $99.
Kind of seems like a step backwards to my inner hacker. You'd think with all of the DLNA stuff being built into TVs these days, Apple would aim for more of a HTPC. That said, having convenient (read, "Joe Six Pack") access to TV and movies via the iTunes stores is probably a smart move by Apple. And if it runs apps, I'm sure a Netflix player will make many consumers happy.