You know I really like Apple products but its pretty pathetic when they don't update something like the old apple tv for something as simple as Airplay.
It isn't actually that simple. AirPlay is a feature of iOS, something the ATV2, iPod, iPhone and iPad have in common. The ATV1, however, runs a stripped down version of OS X Tiger. Neither the ATV1 hardware nor OS are compatible with the ATV2, thus providing an upgrade for it with the same features would require a significant software development project, which isn't going to happen for an obsoleted product.