FWIW, I cancelled cable (other than the basic networks, networks plus cable internet is about five dollars more than just cable internet, so we kept the basic networks in case we need to watch the news or weather channel or something) a month and a half ago and don't miss it at all. Between my existing DVD collection (movies come out pretty fast now, and TV on DVD is generally priced very reasonably [except for Dr Who, what's up with that?]), occasional DVD purchases (real occasional, I haven't bought a dvd since the end of July, till the DD sale), online network viewing for the Simpsons, and of course hundreds of hours of entertainment in my 360, cable TV is a very distant place.
That said, I do want to hook up my wife's laptop to the TV so we have that option, I just haven't bothered doing it yet.
I do plan on renewing Netflix, when I get my 360 back and can do the online-watch thing. I would suggest the 3 out as well, with 3 out you can be in a nice cycle of one-to, one-from, and one-watching, rather than having to wait for them to ship out the disk.
Like someone else has said, it depends on what you watch. No one in my family watches sports, I get my news online, I catch TV shows only when they come on DVD, I've got plenty of kids or kidsfriendly DVDs for my boy, and my wife watches her shows on Youtube. Looking at our cable bill one month we realized just how much money we were wasting for something we didn't use....and it was tough getting the cable people to understand we wanted the bare minimum ("You know you only get like 12 channels with that, right?')