Our Tivo died last week. It was more than five years old, which is an eternity for a computer, or a home entertainment device, and the Tivo is both. So I wasn't exactly heartbroken. Plus, I've had my eye on the new Tivo HD, so it was kind of a blessing. We got a deal on a refurbished one, and it's been great so far. It's great, for instance, that it picks up both cable and antenna, so I can finally record content off the PBS back channels, where all the how-to stuff is.
But Netflix is the real killer app on this. Their "Watch Instantly" title list isn't everything, but there are a ton of old movies on there, and the new releases that show up there are the sorts of movies I might want to see, but don't want to spend $3 on at the rental place (i.e. anything with Nick Cage). I've even found myself using it to watch movies I already own simply because it's easier than going upstairs to find the DVD. For first run movies, we can rent those from Amazon and download them straight to the Tivo.
Between Netflix and the Tivo, we're getting all the functionality of high-end digital cable, but at about half the price. The only thing we're missing is the music channels, but neither Christie or I are really music people. If we were, Rhapsody is available for Tivo, too. It costs money, but it would still be cheaper than digital cable.
I think we're getting closer to "roll your own" cable, but I'm not sure it's going to come from the cable companies.