Well the current Apple TV is pretty cheap…
Jobs told his employees last year that there is no money and no business for them to make TV sets, it doesn’t mean they won’t expand further into that market.
I believe their strategy will be to evolve the current Apple TV product and maybe license TV manufacturers to include Airplay support. They already license it out now anyhow. Their solution will have a far wider impact if every iPad/iPhone/iPod owner can just plug the small ATV box into their HDTV, instead of expecting everyone to buy new TV’s.
Siri on ATV would be pretty cool.