timmmay: WD TV Live (or something like that) is apparently worth a look too.
I took a look - trialled it at home. It's a nice idea but it had some problems that were deal-breakers for me. For example, (I think I mentioned above) FF and RW don't work reliably for some file formats; there's only a 10 minute skip ahead feature - no good for skipping ads; you can't tweak settings while a file is being played - you have to stop and restart; you have to find your network shares and authenticate with every restart; WD support is script-driven with little indication that questions asked have actually been read and considered.
I sent the WD TV Live HD back. There's a version called the Hub, but indications are that it has its own issues. I tried a WD MyBook World Edition (which has NAS and DLNA servers built-in). I reformatted it as HFS+ so it could be used directly on my Mac via USB if needed. This format is said to be supported for the WD. I could mount it from my Mac via SMB, but I got privilege errors when I tried to delete files. They seemed to be deleted anyway, one at a time only for a batch request, but the space did not become free. Essentially, it corrupted the volume directory.
Next time round I'll take a look at the ATV I guess, but the "jailbreaking" thing doesn't sit well with me. I may get a Mac mini instead and use that as a server.