It all started when they signed that 28 days later contract for movie rentals. I thought I could live with it, but to be honest, I can't.
I previously was on their 3-DVD at a time, and as a long time user, I had the Bluray option (for free). But as things gradually moved on, Netflix started charging for Bluray discs, at about $4 more a month.
What finally broke the camel's back was that Netflix just wasn't getting movies I wanted to see. Heroes Two wasn't available on Bluray, Justified wasn't available on Bluray, and countless kungfu titles such as The 14 Amazons and Shaolin Hand Lock simply wasn't even on Netflix's radar.
I switched to Blockbuster Online, which offers rentals with Bluray (no additional fees), no "waiting" for Hollywood movies, and selections.
But Blockbuster isn't out of the woods yet, I don't know what it is, but they take longer to send movies. Perhaps it's because there is no distribution center in my city, but I'm OK with waiting an extra day or so. This past week's been brutal to them because of the snow-storm, they took a week to ship movies to me. They apologized for the delay, but unlike Netflix, did not offer any extra disc or compensation.
I don't hate Netflix altogether, I'm still on their basic $7.99 all-you-can-stream plan, because I think it's a good deal, but let's face it: they don't have the best selection of movies for on demand.
I may get rid of this plan in the future, depending how often I use the streaming service.
UPDATE 4/3/12: It's been more than a year and I thought I'd update on the current situation. Not long after I wrote this, Netflix announced doubling their pricing for streaming and DVD rental - essentially doubling what I was paying. While the price increase didn't affect most people (some people stream only, some people only rent DVD), it affected me because I was using both feature. So I ended my subscription to Netflix sometime in mid 2011.
As for Blockbuster, they also suck. Not only do they take ages to send you a disc, but they RARELY had anything in stock. They had things listed as "available", but when you order the disc, you'll never get it. I mentioned they had a lot of Kungfu movies, that's not the case. They have them on their database, but they often don't have the disc available for rental. I eventually canceled my service last November.