The big rumor leading up to Jobs’ Macworld appearance was all about iTunes going to the movies. Or, more specifically, movies coming from iTunes to your desktop. And this time the rumor was true.

iTunes Movie Rentals works with Apple TV and pretty much functions as the name implies.

Customers can start watching a movie as soon as it starts downloading, otherwise they have 30 days to view the film. Once a viewing starts, customers have 24 hours to watch the movie before the file expires. Prices start at $2.99 for library titles, $3.99 for new releases and a $1 bump in price for high-definition versions.

Unlike other online movie rental services that restrict viewing to the computers used for downloading, films rented from iTunes Movie Rentals can be watched on TV. But there is a catch. You’ll need Apple TV to do so.

Introduced in fall 2006, Apple TV is a digital media receiver that connects to the television and can be used for playing music, displaying pictures, watching TV shows, or just about any other media content you can store on a computer. While you still need a computer connected to the Internet to fully enjoy Apple TV, you control the unit via a handheld remote control, much like operating a DVD or DVR remote control.

Apple promises that it will have more than 1,000 titles available on iTunes Movie Rentals before the end of February. Apple TV costs $229.

Do people want to rent movies from iTunes? That’s for consumers to decide, but investors apparently think so.

Shares of Blockbuster dropped nearly 17 percent to end up at $2.69 per share the same day Jobs announced iTunes Movie Rentals. Netflix also saw its stock drop 3.2 percent to end at $22.05.

But tech stocks were also on the down slide on the same day Jobs announced Apple had entered the movie rental biz, and Apple shares fell 5.5 percent to close at $169.04.

Along with iTunes Movie Rentals, Jobs announced another movie product: Digital Copy for iTunes. This product allows movie fans to transfer DVD films to computers, and then transfer the file to personal players or Apple TV units.

Here’s how it works. After inserting a DVD in a computer’s DVD tray, iTunes then prompts the user for a code number that comes with the DVD. Punch in the number and then the iTunes software transfers the movie to the computer.

However, unlike music CDs, Digital Copy for iTunes allows a DVD to be copied to only one iTunes-enabled computer. This, along with having to enter the DVD-supplied code, is meant to prevent unauthorized copying and distribution.

So far, only Twentieth Century Fox is participating with Digital Copy for iTunes.

Digital Copy’s success will depend on whether the other major film studios are willing to trust Apple with their digitized celluloid wares.

Movies weren’t the only news coming from the mouth of Jobs. A free iPhone software upgrade offers several programming tweaks, such as revamping the mapping software to give users instant location information. A software upgrade for the iPod Touch lets the player do everything an iPhone can except make or receive phone calls. The company also upgraded its Time Capsule software used for automating computer backups.

But perhaps the exciting announcement at Macworld wasn’t about iPhones, movies or iPods. Instead, it was the debut of the world’s thinnest notebook computer.

The MacBook Air is only .16 inches at its thinnest point, has a maximum height of 0.76 inches, comes with a 13.3-inch monitor and weighs in at 3 pounds. Go ahead. Take a look at your own laptop and then try to convince yourself you don’t want one of these lean, mean computing machines. Prices start at $1,799.

“We’ve built the world’s thinnest notebook – without sacrificing a full-size keyboard or a full-size 13-inch display,” Jobs said. “When you first see MacBook Air, it’s hard to believe it’s a high-performance notebook with a full-size keyboard and display. But it is.”