Yes, a STB is required to watch live IPTV. Otherwise, a PC will not be appealing to all consumers who don't want to spend the money on a PC to watch TV.
I have seen a few IPTV service providers at the CES 2007 show. Most bundle a few channels and stream it from their servers using some kind of encryption that only received using their STB and with an authorized account.
High speed broadband service is required. Anything less than 16 mb speed will not work well if you have multiple TV and you want to watch different channels independantly (including
HDTV). With current DSL/Cable speeds you will only watch 1 or 2 SD channels only. The quality of the picture is like watching a VHS tape.
The major telecoms like AT&T is distributing IPTV service in test markets using fiberoptic cables and high speed internet.
Europe (specially France) BTW is way ahead of us in this regard. They have IPTV service for years now.