Apart from hacking a TiVo to increase its storage capacity, it is also possible to add additional features to the unit by getting a bash prompt on the machine and loading additional scripts onto the machine. Because the TiVo provides TCL, such special pieces of magic like TivoWeb exist, letting you view and manipulate the program guide, season passes, scheduled recordings, and available recordings from a web browser. You can also hack the TiVo to use a serial or network connection to phone home instead of tying up a phone line.
Other hacks include adding caller ID support (showing who's calling on the TV as a system message), remote control emulation, video extraction, and even running a web server. Note that video extraction is a taboo topic on some discussion boards and forums, and most definitely annoys TiVo, Inc.
A TiVo is truly a hacker's dream.
I also feel compelled to add that the DirecTiVo, a DirecTV satellite receiver with TiVo guts and software, is pure bliss due to its ability to record two channels at once (while still counting as only one receiver for the bean counters at DirecTV), and only costs $5 a month instead of $10 like the "regular" TiVos do.