There have been a number of studies done about the ways in which people watch TV. For most, TV watching is a passive activity. I can say from personal experience that my wife watches a great deal of live TV, simply to have something on while she is engaged in other activities. I now rarely watch live TV, preferring to watch DVR recordings or Netflix. My kids watch a mix of live TV, DVR recordings, and Netflix. If it were only me, I would be a cord cutter. I can receive network TV just fine with the antenna on my roof or in the clear channels on cable (not blocked by TWC even though I subscribe to internet only). I can record all the network shows I want on my PC and watch them on the XBOX 360 in the living room. My wife would find that unacceptable, since she watches a lot of Bravo and TruTV shows. From my perspective, until live TV viewing is replicated on the internet, cable and satellite TV will remain pretty much as they are today.
Something like the Apple TV could take the current viewing experience to a whole new level, without disrupting the current cable business model (sorry satellite TV viewers, you are probably out of luck). Slap the new PlayReady DRM technology in it, offer it as part of an internet/TV bundle, and cable companies have the TV equivalent of the iPhone. Everyone is going to want one.
edit: On second thought, maybe satellite TV subs aren't out of luck. There could be some sort of a deal possible to make such a unit compatible with Dish Network, make it work sort of like a Joey on a Hopper system. Not likely, but possible.