Great thread, here's what I did to kick cable/Sat habit.
After years of viewing and having used Dish, Direct and Cable at various times, I noticed 95% of my viewing habits were Local programming with only a handful of Fx & TBS shows that I could easily live without or rent via Netflix. Sports is not included in my viewing habits, so no 'need' for ESPN, etc.
I'm lucky that I can get all HD locals via OTA. I did have to add an amplifier to boost a few signals, but I now have a rock solid OTA signal.
Coming from an HD DirecTivo (HR-250), which I liked, I bought a Tivo S3 and Tivo HD in 2007 both with Lifetime service (added later) to avoid any future Tivo fees. As we all know Tivo is not cheap, but I like the UI and hate messing with HTPCs. Networked Tivos also allow me to transfer shows between Tivos and to my PC for archiving to a server.
I won't bore you with the math, but I essentially paid for both the Lifetime Tivos in about 20 months of DirecTV savings @ $75/mo. Like I said, not cheap, but I was going to pay this same amount out to DirecTV anyways, so why not invest it in Tivo hardware and Lifetime service and stop the endless DirecTV payments.
I realize this setup is not for everyone with high upfront costs, limited to HD Locals, no CATV sports programming and requires a solid OTA signal.... but it works for me. I now have a ZERO dollar TV bill. I can record Local HD programs to two Tivos and do not pay for programming I do not want or use.
Currently Tivo offers Netflix streaming, Pandora and Amazon on demand video. Looks like they may add Hulu Plus to the Tivo Premiere which may trickle down to the Tivo S3/HD hardware as well. I'm watching to see how this plays out. given these pending service updates, I have not stepped up to a Hulu delivery solution yet, but I do have two WDTV boxes which can stream content form my Windows Home Server just fine. These work fine for downloaded content, which I will leave for another discussion.