I upgraded my Apple TV gen 2 to IOS7 and it stops with an icon of a music note and usb plug in . Just keeps flashing the Apple TV box.

If your problem persists get yourself a micro USB cable (sold separately), you can restore your Apple TV from iTunes:

1. Remove ALL cables from Apple TV. (if you don't you will not see Apple TV in the iTunes Source list)
2. Connect the micro USB cable to the Apple TV and to your computer.
3. Reconnect the power cable (only for Apple TV 3)
4. Open iTunes.
5. Select your Apple TV in the Devices list, and then click Restore.

(You may already have a micro USB cable if you have a camera or other digital device)

I had the exact same issue with my Apple TV 3rd Generation. I went today to an apple store and they gave me a new device since it was still under warranty. But now I'm back to the oldest version with my new device! I'm going to wait for a while until Apple fix their update. I'm afraid that if I upgrade now I will get the same problem.

Just FYI, there is no iOS7 for ATV, the current version is 6.0.