Apple TV Harddrive

I like the idea of Apple TV and may use it to replace my cable TV and just watch Podcasts when I want to watch something. I have a mini Mac with a 300 GB external Hard Drive. I am trying to understand the Hard Drive size options on the Apple TV. What would be the difference between the hard drive options other than size? What is the hard drive used for? Would video podcasts be store on the ATV or on the mini or does it depend on how I configure my network?
Thanks.

Size is the only difference. And so your decision is based on how you want to use ATV:
1. If you dont mind leaving your computer turned on all the time, with iTunes running, you may just get the 40GB ATV and stream from iTunes to ATV. The responsiveness when streaming can be a tad slow, anywhere between 5 seconds to 30 seconds until a movies starts.
2, If you want to be able to turn your computer off sometimes (the mac mini is quite loud), or you dont like the responsiveness, then you should sync some/all your media content to ATV (the ATV makes no noise at all).
If you want to sync, but have more media than fits on the ATV, the you need to manage it. What I do is move some files straight from iTunes to a wireless HDD. That way, they dont sync to ATV but I still have the movies if I ever want to revisit them.

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