If you read my post regarding my woes with upgrading Apple TV, you may have been put off on doing so yourself. Well, I rang Apple (I bought AppleCare for this privilege) and it was good to find out that I was in the minority with regard to video choking, which was my biggest issue. The suggested remedy was to restore, then upgrade again. Apparently, 1.0 (or whatever shipped with the Apple TV) is stored in a partition and is not overwritten by later versions, so that’s why mine was restoring to 1.0.
I did this and it appears to have resolved the choking issue, plus a similar issue with audio choking when syncing was being done concurrently.