SSH into your Apple TV 2 using either Putty if your a Windows user or the Mac/Linux terminal
For Linux/Mac users "ssh root@ipaddress" when prompted enter the password, probably alpine if you haven't changed it.
Backup your hosts file:
cp /etc/hosts /etc/hosts.bak
Paste the below commands, this adds entries to the hosts file that effectively block updates.
echo "127.0.0.1 appldnld.apple.com" >> /etc/hosts
echo "127.0.0.1 mesu.apple.com" >> /etc/hosts
echo "127.0.0.1 appldnld.apple.com.edgesuite.net" >> /etc/hosts
If you need/want to restore the original hosts file do the reverse:
cp /etc/hosts.bak /etc/hosts
dtviewer's instructions for using putty under Windows
JediKnight2's instructions for Mac without ssh/command line same process could be applied to Windows with WinSCP and notepad (or notepad++ if you like a decent text editor)
If you're a Linux (Ubuntu but applies to any gnome desktop and possibly kde) user and don't know how/want to use ssh in terminal then you can type this into the location bar into the file manager (nautilus) sftp://email@example.com/ replacing 0.0.0.0 with the IP of your Apple TV 2, then simply navigate to /etc and find the hosts file and double click which should open it in "Text Editor", make the required changes as per below and click save.
Alternatively you can manually add the below lines to the /etc/hosts file using nano or vi
Or as outlined by other members you can install a package called updatebegone which does the same as the above, however some report that this doesn't solve the update notice.
apt-get install com.nito.updatebegone
See jd2157/galvanash's notes about updating before installing updatebegone.
If you have already updated to 4.3 you may be able to get your 4.2.1 shsh blobs and downgrade back to 4.2.1, search google for "Tinyumbrella"