I made the mistake and gave in to nag-message and updated the software of my ATV3 from 5.0.2 to 5.1.
After the update everything seemed fine. The next day my family reported issues playing movies - when starting playback it would hang forever. The menu was still responsive - so using EXIT (on the remote) and re-starting would (in rare cases) fix the problem. At first I tried to re-boot (selecting restart from the GENERL menu) and that also does help in some cases. After one week my family was finding that even music did not play anymore.
To solve the problem, I reloaded firmware 5.0.2 - I had to buy a micro USB cable first; the downgrade is done using iTunes.
Now back to v5.0.2 all my content - video and audio plays without issues again.
I hope Apple fixes this problem.
ATV3 running firmware 5.0.2 plugged into home network using a cable (WiFi disabled). Home sharing from a MacMini running latest OS (10.7.5) and latest Tunes (10.7) using a external TB disk to store downloads from iTunes Store and my own audio/video collection (i.e. additional content).