Android apps on the TV has the potential to be huge particularly if the build these Google TV systems with a decent video chipset (like that Tegra chipset Nvidia's been demo'ing on a prototype Android tablet). Particularly with Logitech, long time maker of TV remotes and game controllers, on board, this could challenge Wii for home gaming, possibly even challenge the Xbox 360 and PS3.
While I can see something like this doing very well against the Wii in the casual gaming market, the hardware is too slow to compete with the 360/PS3 graphically for hardcore gamers.
That said, this isn't necessarily a bad thing. Hasn't the Wii been wildly more profitable than its competitors?
We don't know what the hardware for GoogleTV will be yet do we? But you're probably right. The odds that it'd include Xbox360 level hardware are realllly slim. :-(
