Help! iPhone 4 won't connect to Apple TV (2nd gen)

I just got a new ATV today and everything seems to be working. It's able to connect to iTunes and play songs and movies and display pictures. I'm trying to set up my iPhone 4 as a remote, but am having some issues. The Apple TV shows up in the list of libraries, but when I select it, the animated "thinking" icon shows up on the right but keeps going and never connects.
Any suggestions on how to get around this? Any help would be appreciated.

There are reports of network issues only after adding the new ATV to the network wirelessly. Personally my iPhone 4 works pretty well but at times might become sluggish.
As for the two libraries that is correct. Its detecting iTunes on your computer and the ATV. What you select depends on what you want to do.
Select Apple TV if you wanting to use the iPhone as a touch remote to directly control movement and selection while viewing the ATV interface on your screen and want complete access to ATV2 features.
Select Apple TV then select a computer *from the list on the iPhone* to browse iTunes library content on the iPhone but have it playback music and videos on the TV. This is for music, music videos and movies in your iTunes Library only.
Select computer instead of Apple TV to browse iTunes library content on the iPhone. Select Apple TV as the Remote Speaker from the iPhone interface. Audio will play through ATV or stereo depending on how your audio is hooked up. Music album art and info will display on TV. This is best for when you just want to listen to music. Its also the only way that allows you to control the volume directly from your iPhone.

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