At least get a 4 Mbps line, Netflix and YouTube is quite smart managing with the internet speed you give it, so it will give you the best picture quality possible.
My sister has 4 Mb ADSL at her place and she streams YouTube, Netflix and Showmax just fine straight on her Samsung TV. I don't know specifically what the Apple TV will do with a slower connection, all I know is that it works great with a faster one, my connection averages around 15 Mb.