Some are suggesting that the Apple TV might benefit from the dual core A5 system on chip that is found in the iPad 2, one which comes with much better graphics capabilities.
This may well mean that the Apple TV could, in the near future output to full HD, 1080p, rather than being restricted, as it is right now to 720p output only.
The iPad 2's ability to output at full HD using an optional HDMI connector was highlighted by Steve Jobs during last week's keynote presentation and may well feature in the next Apple TV.
However, as CultOfMac suggests, the Apple TV needs a better software, not a faster hardware.
Other mention the fact that 720p is good enough even on large screens as all iTunes shows are currently running at 720p and that network issues are more of a concern as it stands.
Then, there's the very fact that the Apple TV may be made obsolete fairly soon. When the iOS 4.3 firmware update is rolled out, the Apple TV will not get it although the iPod Touch, the iPhone and the iPad will.
Furthermore, new improvements within the OS notably when it comes to wireless connectivity means that any of the three aforementioned devices will be able to replace the Apple TV in a near future.
The only thing missing is a suitable connector either in the form of a Wireless HDMI base unit connected to your existing television set (see our April fool from 2009) or included in the TV itself as the new Apple TV (rather than the Apple TV Set Top Box it is now).