[themoneycollector]

cheap yes, quite a stretch to call it sorry and underpowered. It's a fully powered Linux computer in a tiny form factor. I'd say it's more capable than other option mentioned so far and open source at a significantly lower price as well.

Ethernet, HDMI, that's about all the connectivity you need. As far as I can tell, it has 2 things more than an ipad at 1/10th the cost. OK so you'll need an additonal $10 usb dongle to get wifi on it if you can't do wired ethernet.

I have had a similar interest to find something cheap to leave connected to my tv as well to do these:
1). play movies/music off network shared drive or nas (or saved onto a USB or SD card - wait....even an ipad doesn't even give you a usb port standard on a $300+ device)
2). view *most any* (here's where I'm not fully sure, but all signs point to yes) web based videos (youtube, putlocker). Netflix is available with some additonal work, but hopefully should be a nice neat app soon.

The RPi is just an option depending on whether you wanted to spend the minimum and still have great tv capabilities. If you're budget is higher, I would recommend a miniITX form factor HTPC before spending the money on an ipad/appletv. You'd still come out ahead and completely blow away any option in terms of flexibility and capability.