My user name has changed but I have an update on the same issue (was KIRKECON2010). I have thoroughly tested my sus-systems- istumbler- has a 68% signal for 802.1n wireless- from my laptop I tested the speedtest.net and was running at an awesome 40 - 50 Mbs download - and thats on the wireless. I even attached the gigabit ethernet to the Apple TV. The results are this- compared to running it directly out of my hdmi on my PC laptop (which has a good processor and a good video adapetr), Netflix on Apple TV is awful, terrible, and unviewable. Specifically- if the scene has any detail, the image stumbles/jumps; if there are large mid-tone areas those areas are badly pixilated; and overall the clarity is soft.
The quality is out and out unacceptable. Perhaps Netflix has done a very poor job in encoding the MP4 for Apple TV but in any case- it is a disaster. I will say that I have a 50" plasma- maybe on an Ipad it would be OK - but really is that the point? I was looking for a high-quality device- and in regard to netflix - Apple TV certainly can not deliver.
I briefly tried Airplay from my Macbook Pro Retina to Apple TV. I was surprise that it didn't seem to suffer the same issues as with the Netflix viewing. I will need to do additional tests however before I can give Apple TV a pass on programming other than Netflix.
If I were judging just on Netflix- ATV would be on its way back to the store and I would recommend it for the junkheap.