While I love the chart Brian posted and reference one similar there is one thing that has not been mentioned which is content.
The VAST MAJORITY of content on tv today was filmed or is still filmed at 480. Those shows that are advertised as being hi-def the majority of those are really just upsampled from 480. So that leaves a small portion (some but not all new shows) that are filmed at 720 or even rarer at 1080.
Then factor in who your provider is. Cablevision, Comcast, U-Verse, etc all compress their signals so they can fit all of their programming through the cable into your house. You may see that the game is broadcast at 1080 but you aren't getting anywhere close to that resolution in real life. You're getting a compressed version of 1080.
My suggestion if you don't watch much television with fast motion (i.e. sports) then save yourself a ton of money and buy a 720 tv.
AppleTV is a great choice for high def content.
Not trying to stir an apple / anti-apple fork in the thread but there are several alternatives that do what the AppleTV does with better specs (1080 support) and the same or lower price point and apparently do it better. As just one example look at the Roku boxes. http://www.roku.com
They are getting much better reviews than the AppleTV box. The AppleTV boxes are also having major problems playing on older HDTV's.