Following the release of iTunes 11 earlier today, Apple has released a new software update for 2nd and third-generation Apple TVs. The update brings support for new iTunes 11 features, namely iTunes Up Next, and increases overal stability.
From Apple’s release notes:
iTunes Up Next
Adds support for Up Next with iTunes 11 or iTunes Match. See upcoming songs when playing music on your Apple TV. Add new songs and edit what’s queued with your Remote or with the Remote app.
Stability and performance
Includes performance and stability improvements with the iTunes Store, AirPlay, Netflix, iTunes Match, and wired Ethernet connections.
To apply the update, simply go to Settings > General > About on your Apple TV and choose the Software Update option.