Brian,
I have 5 AppleTV's in our house, all generations ATV1, 2 and 3 - all stopped working properly after recent updates (to Mac OSX and AppleTV) so it was difficult for me to isolate which update caused the issues - however it is worth noting that there have been no updates for the ATV1 for a long time - so nothing has actually changed here, so in my case the problem was iTunes/Mac related.
My MacMini was set to sleep after 2 hours, the ATV would wake it up to start playing a movie, then after 10 minutes they all had problems:
On my AppleTV version 1 - the film would stop playing without reason and go back to the main menu,
On my ApplyTV version 2&3 - I would go back to the menu, and on attempting to play again I get "Home Sharing not enabled"
On the MacMini "Console" log I noticed that there were a lot of errors about "Sleep" and "Network adapter going to sleep" - what was interesting about this is that it was going to sleep even though iTunes was busy.
I set the "Sleep" option in Power Management on the MacMini to "Never" and tried this for a couple of nights, and no issues - all worked OK.
On the advice from Applecare, I removed the "Power Management" preference file, and rebooted - this had limited success.
Although I was sceptical, booting into Safe mode caused the MacMini to rebuild it's caches (so I am told,) and on rebooting normally I find the errors about Going to Sleep no longer appear,
It's been a few weeks, but I am happy to say that my Apple TV's all work as they should (which is just as well, as I had reached the limits of my patience.)
Most of my ATV's are wireless (5GHz) and one is Hardwired through the router in our living room - all showed the same issues initially (even the hardwired one.)
Our MacMini is hardwired to a TimeCapsule whish is in turn hardwired to the router.
Hope this gives you some pointers.