from 2x aTV household:
I am currently recording 1024x576 (16:9 PAL-SD) broadcast,
but the very same TV show on ITMS is only 640x480 (4:3 NTSC-SD)- and there is a noticeable difference in quality between the two driving a 1080i display.
I do agree that 720p (1280x720) and full-HD (1920x1080) will not make a big difference; in theory yes- but once you get 720p content I think you will "see" it the same way. I guess it has also to do that 720p is MP4-H264 encoded, and MP4 just "looks" better (like one class of resolution more).
To summarize: I'd buy more movies and TV shows, but the current resolution does not seem to make it good value given the measly (640x480) pixel quality.
Come on Steve, at WWDC Make the Apple TV Great