Exact same problem here. Neflix will not launch on my Apple TV. Either I get a beep or the entire Apple TV freezes for about a minute.
Reset settings, reset everything and installed updates again, which downloaded from the internet. Youtube, renting movies from Apple all work.
It does not even launch Netflix. You click on the 'netflix' menu item, and the Apple TV either beeps or hangs for a minute. When the hang is over, it looks like the Apple TV OS kills off Netflix, then blank screen and the 'Finder' (Front Row app for AppleTV2) restarts and comes up.
Also netflix was having trouble on computers in the house for a day before this, but that seems to have fixed itself. Again - trying all reset things on netflix did not work.
Part of an answer
If I switch to using my iPhone hotspot as an internet connection for the atv2 then it works. Which is not a real solution, as of course it will use my data plan up fast!
After I did this and watched a show, then switch back to my real internet connection, Netflix does not work, but it now actually runs and shows the unavailable message after a minute.
So it must be some detail with my network. We have two apple tvs on different Netflix accounts and diff iTunes accounts on the network, which uses an apple time capsule for a router. Putting the atv2 in the Dmz did not help. Again - all other internet works on this atv, as does the other atv.
I have the exact same problem...AppleTv2 is trying to connect to Netflix, when I wirte my login data to Netflix. I got a black screen (of death ) or a message: Can not connect.
It seems to me that ATV are very unstable atm in genneral I can not recommend the product to anyone
I hope Apple very soon comes with an update to ATV???