From Cnet.com, Apple's iTV: promise and peril
As I told someone who works on iTunes at Apple last October, what I have really wanted to be able to do is move videos from iTunes to Tivo so that I can watch the content on the big screen. The iTV sounds like reasonable alternative. From an engineering standpoint, it would seem like a good idea to put a hard disk in the iTV to give it some of the functionality of a DVR.
The hard disk could be used to buffer the video stream to offset some of the potential wireless network issues. The iTV could initially display a message saying that it will be 20 seconds before the show is available for viewing, while it preloads enough of the program to ensure a high quality experience. You could pause and rewind the program like a Tivo.