I'm a late arrival to this discussion and only showed up after purchasing an ATV2 about a week ago for the specific purpose of streaming Netflix content. I wouldn't have bought it had I read this thread, but the results of my efforts to solve the same problems I experienced immediately may be of interest to others. My system: Samsung LN-T4665F HDTV, Sony BDP-S300, Sony STR-DG510, and Scientific Atlanta 8300 HDC with Time Warner. The comments of others focused my attention on possible solutions, but the bottom line for me was to consider the ATV2 as the single common denominator associated with the vast majority of complaints. Like others here, I decided to keep it for "in-house" use and look for another way to stream Netflix content.
Then yesterday, a friend in the home entertainment business mentioned that he never advises customers to rely on wireless connections for video. Just last week, he had installed a Powerline Ethernet system in my wife's office as a less-costly alternative to replacing a bad Airport Express. I brought the components home that afternoon and hooked the system up: the "mother ship" is plugged into a wall outlet in the study upstairs with an Ethernet cable connected to our Buffalo Air Station Turbo G wired/wireless router, and the satellite unit is plugged in at the entertainment center downstairs with a cable to the ATV2. This converts every outlet in the house to a potential wired Internet connection. Everyone else may know about that capability, but I didn't.
Last evening between 8-11 pm, I watched three episodes of "Damages." Streaming wasn't flawless, but the glitches were very minor: one audio cutout that lasted for about five seconds and recovered on its own; another audio cutout in which I hit the pause button, waited a second or two, pressed play and it recovered immediately (I think I read about that tactic in this thread somewhere); and one instance of pause/buffer with the SWOD that lasted for less than five seconds and recovered on its own. My conclusion: This could work for me if that's the worst of it. I plan to watch something on Netflix during prime time for the next three evenings as a test of the reliability of this solution.
None of this addresses the frustration of comparing the Apple TV-Netflix advertising claims with demonstrated performance. It's supposed to be a wireless device, there is no small print to caution potential buyers about possible unreliability of the wireless signal, and customers have the right to expect it to work right out of the box. Having to purchase a Powerline Ethernet system to obtain acceptable performance really raises my temperature, but the lack of Apple response and the red "unanswered" at the beginning of this thread and others is just typical corporate behavior I can't do anything about. Returning the ATV2 might be one small protest, but at this point, it simply isn't worth the trouble, and my music and photos on my TV is pretty nice.
Hope this helps someone.