Apple has recognized that there are some 2nd and 3rd generation Apple TV users having problems updating to Apple TV software 5.1.1 if they’re using a ethernet cable instead of wi-fi.
In some instances users are also having problems viewing Hulu Plus, MLB, NHL, YouTube, Photo Stream and WSJ Live on Apple TV.
According to Apple the issues are resolved in Apple TV software 5.1.1.
The solution is to disconnect your ethernet cable and update your Apple TV over wi-fi. If for some reason you are unable to update over wi-fi you can plug your Apple TV into your computer and update using iTunes.