I ask myself this question every year when my renewal time comes around, but I always end up letting it renew. I love the expedited shipping time, and I love not having to try to stack up 25 bucks worth of items to qualify for free shipping. As far as I'm concerned, that fee they charge is just an upfront shipping charge, and I make sure to make the most of it. Amazon beats my local prices on everything. Books, games, movies. There's no comparison. I sorta feel bad for the local merchants, especially specialty stores like the comic book shops, but Amazon often has their price beat by 30% ~ 50% percent. That on top of 2nd day delivery, which means no fighting traffic to visit three or four specialty stores, is really nice. Prime also really makes it easy to take of advantage of the various specials Amazon runs - no trying to piece together enough items you don't know if you really want to get that free shipping.
What I have notice though, is that prime leads me to do more impulse shopping. Possibly buying items I wouldn't normally buy. Since I don't have to get together $25 together worth of items to get that free shipping, I'm more likely to jump on a movie or book they have on sale for nine bucks or so, or jump on a twenty dollar gold box video game sale.
Amazon doesn't have everyone beat on prices though (as anyone who's really price compared knows). Buy.com has them beat by quite a bit on the Manga I buy. They also have $25 or more free shipping, and I usually wait till I have at least much in items I want to order before I do so. Buy.com's free shipping time sucks though. Often a week longer than Amazon's free shipping (though they have surpised me before), and I always fret over the wait. Amazon has spoiled me on the convenience, but I do think that convenience does lead people to make unnecessary purchases.