I have been cable free since 2012 and have owned an Apple TV since 2009. I can tell you that it's been amazing and liberating with just a smidge of frustration.
First of all, WAIT!
For two reasons--one, Apple is rumored to be bringing a new Apple TV to market in the Fall. You should wait to see if that has most of what you are looking for in terms of functionality. As an addendum to that--do you have an HDTV? Apple is notorious for moving in a technological arena that forces you to upgrade--as a tech guy, I can say they are usually right but still it is highly inconvenient at times.
Second, ask yourself what sort of shows you truly and religiously watch in that to not have them would be more painful than your current cable bill increasing. This is the biggest one. Despite the money I now save, I've had to make some mild lifestyle changes but as a tech guy I am perfectly down with that---not everyone is.
1. If you watch, say, Sons of Anarchy (I don't but just making a point) on FX--losing cable, even downgrading your cable package means you will possibly lose that show. However, the average American household's cable bill is $120-$150/ mo. That's a max of $1800/yr. Now figure it this way, if you don't mind paying iTunes per episode charge of $2.99 per episode (then you will get the whole season (less than 24 hr per episode) available for viewing for less than $40!!
Say you have 10 shows you religiously watch and that's still $400 vs. $1800.
2. Genre fans are better off--Hulu, Netflix, Crunchyroll -- all offer anime almost simultaneous with Japanese releases for less than $10 a mon (Netflix doesn't but does have exclusive shows and are a few months behind the latest season of most shows you may enjoy). Crackle is FREE and has some decent original and classic shows and films. It's conceivable you can enjoy this sort of experience WITHOUT ever getting the per episode charge via Apple thereby truly reducing your bills.
3. If you also own an iPad then you can view programming via the apps (lifetime and other channels offer direct access) and simply Airplay them to your Apple TV --all free in most cases (although you will have ads).
4. SPORTS--the last big win for cable (HBO will fall) and aside from a few options NBA TV, NHL LIVE, MLB AT BAT, MLS and a soccer program (for EPL) coming soon--then, it's tough to get that live broadcast. I think this too will pass but this has been for me in particular the part where I find myself spending more time at social gatherings (friends/ bars) for sports due to this problem.
Apple TV has a few apps that will change your viewing habits if you let it. Photostream gives you a new way to keep up with friends and family, POdcasts offer some surprisingly awesome content from TWIT to TheVerge and many shows which are offered as podcast (including nightly news) and again you can buy TV shows and buy/ rent movies and often there are deals which are free or .99 specials. There are other apps that just debuted--Sky News is British but good while Watch ESPN and HBO Go requires cable subscription verification.
I've enjoyed my Apple TV immensely and believe that when they do finally offer pure app experience like on iTunes where I can play games on the TV and have access to more sophisticated apps like Weather and the like--then things will get really awesome.
For $99 you can't go wrong--but I would say wait for the Fall.