Winston Churchill provide what would appear to be a solution; however, it didn't work. Not his fault.
After waiting over 2 1/2 hours for iTunes to down load the firmware it would not update my ATV. I got this message:
The Apple TV "Apple TV" could not be restored. An unknown error occurred (3014).
I then went to softpedia and downloaded it "manually" in 7 minutes, not 2 1/2 hours. Using Winston's instructions about the option key tried again. Again I got the 3014 error.
After looking into the meaning of the error the suggestion was that my system was blocking iTunes from contacting gs.apple.com; however, in looking at my network logs that was not true.
Reluctant to throw my ATV in the trash I made a desperate move. My wife still had iTunes 10.7 on her computer. I removed iTunes 11.0.1 from my computer and installed iTunes 10.7.
I then followed Winston's option key instruction to access the file AppleTV2,1_5.1.1_10A831_Restore.ipsw sitting on my desktop using iTunes 10.7. The restore worked perfectly and my ATV is now sitting on my network and working perfectly with 5.1.1 🙂.
So while it appears that iTunes 11 is wonderful and the bugs they fixed in iTunes 11.0.1 allow you to actually start the restore process for ATV, they didn't get all the bugs.
I'll be using iTunes 10.7 and watch for iTunes 11.0.2. Under no circumstance will I get rid of iTunes 10.7.