G.♣.
Definitely get a Blu Ray player, and definitely pay the extra $10 or so to get one that is Wifi enabled with Netflix and Hulu and Vudo, etc. already on there. So worth it.
We use Netflix mostly for the kids shows. We have rented from Vudo a couple of times. It's a little more expensive than renting from Family Video, but we can decide to watch a movie after the kids go to bed, and no one has to drive to the video store. Also, once your rental is over, the movie is no longer available. You don't have to remember to take it back to the video store.
As Marda said, if you do not buy one that is Wifi enabled, you will have to shell out another $70 or so to buy what you need in order to use any online app.