Apple TV - Take 2 Still no DVR?

I watched the announcements for the second incarnation of AppleTV yesterday after the Macworld Keynote Address by Steve Jobs.  I was watching for a few particular features that I think would make the AppleTV actually take off.  Did Apple come through?  Well here's a quick rundown of the new features for the Apple TV Take 2:

• Price (suggested retail): $229
• 40 GB storage or for an extra $100 you get $160GB (not much storage for the price in my opinion)
• AirTunes support for Apple TV for streaming directly to the device.
• TV Shows $1.99 per show
• Movie Rentals (HD movies with 5.1 Surround for $3.99; $4.99 for new releases) - You can get them but you can't move the movie out of the Apple TV if you acquired them on the AppleTV.  So no portability there.  Another potential downer for me is once you start viewing a movie, you have to complete watching it within 24 hours.
• DVD quality and HD quality + Dolby 5.1.  No other codec changes that I could see
• No computer required to run it since you can link directly to iTunes store via the Apple TV and download without a computer.  It does help to have a computer so you can sync content between the AppleTV and computer and vice versa though.
• You can purchase music directly from AppleTV
• You can browse audio & video podcasts
• Ability to Sync content with youriTunes
• Flickr photo browsing capability
• .Mac photo browsing capability
• Preview movies

As I look at this I still wonder how much of a market there is for such a device.  Why you ask?  Well as a full-fledged HTPC user I certainly want the ability to watch liveTV and have DVR functionality Grant at ProjectHTPC was looking for this and Thomas Hawk agrees.  Is that just because I'm an HTPC hobbyist?  Well I think if you were to ask any of my non-technically inclined family some of which do have iPods and other gadgets they would say "where's the TV?"  "You mean I have to pay to watch one episode of TV that I can get on my TV already for free?"

Apple did take care of several of my issues with the first version of AppleTV so it's certainly an improvement.  I love the small size, the silent nature of the hardware and such but it's just not enough for my needs.

I think those are the questions your average household will be asking.  Apple will continue to sell the Apple TV, but I don't see it being a major success.  What do you think?