I have the 160GB Apple TV going into a Peachtree iDecco and love it.
One of the concerns I have about the new Apple TV is the lack of a hard drive. When I first set it up, I synced a large library and immediately started listening. What I first heard was somewhat disappointing in that it did not quite as sound as good and "full" as my CD player going into the Peachtree (although I would not describe it as sounding bad and it was more the ability to compare against the CD that the difference was readily apparent). However, I then realized that all my music was available streaming before it was actually synced to the hard drive and what I was initially listening to was streaming. After the music was synced to the hard drive, the sound improved and was as good (if not a little better) than using the CD player.
Perhaps the newer Apple TV does a better job of streaming than the older version. It would interesting to know if anyone has had a chance to compare the older version playing off the hard drive to the newer version streaming and if there is a noticable difference.
FYI, the older 160GB can still be purchased from the Apple store under clearance items.