I thought about getting a ps3 for the BRD functionality and games, but at this point I don't want to deal with any physical media. Even if the 1080p is better, I've never looked at the movies streaming through the ATV2 to my 46" LCD and thought the 720p picture took away from the movie. Then again, I'm old enough to remember being the human remote control for my dad and I still have an old tube TV in the bedroom :)
You're probably right about 720 vs 1080. You've go to be pretty close to see the difference on a 46" screen. I believe I read that someone with 20/20 vision has to be closer than 8 feet to see the difference on a 50" screen.
If I was building a home theater setup with a huge projector (or giant LCD), dolby digital (7.1 now?), etc... then of course I want the best quality in everything I can get. A friend of mine has one of these setups and it is amazing.
The above is quite different than the family room TV though. I've seen BRD quality on my 46" TV and yes I can see the difference, but I have to look for it. It's been my opinion for awhile that picture quality and sound at 720p or 1080p streamed is mostly 'good enough' and people now want convenience.
As for streaming, from what I understand, 720p is actually better than 1080p when streaming, because 1080p streams end up getting compressed to the point that they actually look worse than the 720p equivalent. Fuzziness from stretching the 720p signal is less visible than blockiness from 1080p compression. Blu-Ray obviously doesn't suffer from streaming limitations, though.
We were not either, so I would usually rip the DVDs when I got them and then watch it when we had time (also my only dvd player is a 360 and it's so loud...much better to stream over the ATV). After watching I would delete them...honest, I rarely watch a movie twice. Recently that became harder though because of increased copy protections.
How did other HNers respond to the price hike?
Canceled the DVD service the day the price hike was announced.