Works fine with my Onkyo HT-R680 receiver. This was my preferred method to upgrade my home theater as I was out of HDMI connections on the TV and needed a manual optical audio switch to get the 5.1 audio from my ATV, DVD and satellite receiver through my old receiver. Now I run the ATV, DVD and satellite receiver into the Onkyo using it for the switch then out to my TV all via HDMI. Reduced the cables from 10-12 down to 4 HDMI cable cleaning things up quite a bit behind the TV.
I am not familiar with Virgin Media. I have heard of some reports of slow buffering of iTunes movie rentals probably from people using slow or congested internet connections. Even if your provider claims a fast speed it may not be as good at your location and running Speed Test can give you a better idea how good your internet connection is. Streaming content for the most part is only as good as the what is being sent to you. Some Youtube video looks terrible, normally because it was highly compressed when uploaded to their servers. Local streamed content is pretty much as good as the quality of the original file.
It is also tough to compare with streaming video on a computer. The ATV is built to stream video. A lot of video is still stream on the net using Flash. Flash is a resource hog and can still bring down a good fast computer. Even if you have a good computer with a good internet connection some high quality Flash video will stutter due to the computer not being able to process it well enough.
My DSL connection, which is pretty good, provides fast buffering and high quality video from iTunes rentals, Vimeo and most Youtube video. I have the Usher concert playing right now streaming through the new iTunes Festival app. There is a little artifacting but it is good high quality smooth video, great sound that stared up in under 30 seconds. Looking forward to the Jack White concert on Sept. 8. iTunes Festival is a great addition to the ATV as well as the iPhone/iPad apps providing live concerts from London everyday this month allowing you to stream after. I'll have to try to catch a live feed.
My suggestion is it the ATV is only around a $100 now and is worth it for me to simply stream content from my iTunes Library to my home theater set up. Movie rentals and other streaming apps work great for most but are dependent on your internet connection. If you have doubts pick up the ATV at a store with a good return policy, Best Buy will give you 14-30 days to try it out.
Even if your ISP offers a fast connection, they may throttle you. My ISP will throttle my connection during high traffic periods. General web browsing will still be 60Mbps but, whenever I stream a movie from the iTunes Store using one of my Apple TV units, that speed drops to 2Mbps and I know that the movie I am streaming doesn't have a 58Mbps audio+video bitrate (more like 4.5Mbps). They only do this between 5:00-7:00 PM and it is only with their high traffic users. I easily consume over 100GB of data every month as I stream through Netflix and Hulu Plus a lot. I would switch to a different ISP but they are the only ones that offer high speed in my area. Even with the occasional throttling (happens about 3-4 times every two months), they are still worlds better than Time Warner.
It's also important to keep in mind that if you're primarily watching video streamed from the iTunes Store your actual viewing experience shouldn't be all that bad regardless of throttling as the video buffers into the 8GB of on-board memory on the Apple TV (you can't manage this -- it's merely used as a buffer). For iTunes Store content, the Apple TV tries to load enough of this video into memory before starting to ensure that you get a smooth, uninterrupted viewing experience. Therefore, what you're more likely to encounter is a longer period of time before you can start watching something, but few to no interruptions during viewing.
Note that this can still sometimes be a problem if you have a very variable Internet connection, or if your ISP performs dynamic per-stream throttling -- that is starts the stream at full speed and then throttles it significantly after a few minutes. In this case, the Apple TV starts out thinking it has a lot of bandwidth, so it buffers a couple of minutes of the video and starts playback, assuming that it can continue to buffer the video in the background at the same speed in order to keep up. However, if the ISP suddenly drops the bandwidth dramatically for that particular connection, the Apple TV can't keep up and you'll get pauses and delays once you reach the end of the buffer. In this case, the only way to avoid the issue is to pause the video when playback begins and not actually start watching it until you're sure enough of the buffer has filled up -- which you'll be able to see in the form of a white progress bar overlaid on the standard playback position bar.
Note also that this buffering doesn't apply to services like Netflix. In this case, you'll simply get reduced video quality if you have insufficient bandwidth, and may even sometimes encounter pauses in playback, although Netflix and the Apple TV do their best to avoid this by using a lower-quality stream. Similarly, navigating in a Netflix stream (e.g. skip forward/back) can be a pain due to the lack of buffering even on a higher-speed Internet connection as it has to adjust the stream rather than merely the buffer. I've found this issue alone annoying enough that I've actually chosen to actually purchase some of my favourite shows from iTunes rather than relying on Netflix streaming for them.
Lastly, none of these issues really apply if you're streaming content from your own iTunes library on your home network. Buffering still occurs from your computer to improve performance, but any properly-configured Wi-Fi network should have no problem keeping up even with 1080p streams unless you're having other network performance or stability issues.