The video makes the concept a lot more clear than the announcement at I/O: looks like TiVo with search and a web browser. The wildcard, though, is that there will be native Android apps for it, too. See the consumer FAQ and developer FAQ for more. The developer FAQ includes a bit more information on input devices:
All input devices for Google TV will have QWERTY keyboards, but
users will often navigate using a directional pad. Like remote
controls, these limit the navigation model to up, down, left,
right, and enter.