Iyaz Akhtar has published a really good post over at 'The Apple Blog', comparing both system's features and prices:
After you decide how much money you are willing to spend, the main factor to consider is content - what kind of content do you already have? Do you have DRMed iTunes music and video? Both machines play DRMed iTunes media. Are you a DivX fanatic? Then the Apple TV is incapable of handling your media. Keep in mind that the Apple TV can play anything an iPod can. It is effectively a headless 40GB iPod with an HDMI out. If you want to be able to run backed-up copies of your homemade DVDs, then an Apple TV may not be the best option for you.
Read the full post, it makes it quite easy to decide which system to go for.