I agree the price for the PVR unit is a bit on the costly side if indeed it is £125 or so, but if it's an actually conversion of $125USD, then it's quite a fine price.
Either way, it is stupid to say the device is pointless as people own boxes already. That's a load of crap. There are many who still don't, and there will be many who are yet to buy one (ie kids growing up, people moving out/moving places, people arriving in the country, etc). Also people often like the convinience of a unit which 'does it all'.
Microsoft's IPTV is nothing special compared to live TV abilities, it's all pre-recorded, it's an iTunes for Video essentially, but just real time streaming of it. It's no where near as flexible or varied in content as real live TV. Microsoft is falling behind by only offering such limited services.
That said, I don't consider it a bad idea to have, therefore it is good that the PSP and the PS3 will be able to use downloaded video content, but just makes the PS3 even more superior than the XBox360 when it comes to home entertainment devices.
However the PS3 is still overpriced, and I would like Sony to take only one lesson from Microsoft by dropping the prices (as none other is worth following unless you like Microsoft's overheating pathetically noisy consoles which doesn't even ship with any next gen drives to facilitate for the potential of the console, but makes you pay more for it, meaning it wont even necessarily be supported by developers!)