EXCELLENT IDEA!
We live out in the country and get NO chanels with bunny ears. And even without that, we watch a lot of tv. All we need is a computer with good internet connection and a HDMI cable that we attach to our tv.
Hulu - free for most shows. We watch Grey's Anatomy, Touch, Fringe, Master Chef, Hells Kitchen..... just to name a few. Most shows, with the free version of hulu, are available on hulu a week AFTER they air on regular tv. So, we just don't care. I tell my mom "Don't tell me who gets kicked off Master Chef! I haven't seen it yet! I won't see it for another week!" CBS hasn't joined hulu, really. We don't get updates on my hulu account about what shows are new/available. Gotta go to cbs's website for all that which is a pain in the butt IMO.
Hulu Plus - If you want to start a show from Season 1 Episode 1, paying for Hulu is the best way to go. There have been a few times I've said to myself "Grr. Wish I had PLUS!" But really, not that big a deal for us. Try Hulu free for a bit and see if you can't live without PLUS.
Netflix Streaming - $7.99 a month I believe? This is where my son watches his tv (he's 4). Superhero Squad (2 seasons), Martha Speaks (30+ episodes), Dinosaur Train, Garfield .... There is a LOT on there. PM me and I will search a show for you if you'd like and let you know what shows are on there. Shoot, we've watched Shaun the Sheep Seasons 1 and 2 probably 5 times. Kids don't mind watching the same episode again. My husband and I, when there's nothing in our Hulu Queue to watch, will watch Psych (tv show, Seasons 1-5 on Netflix) or watch a movie on Streaming. Movies on Netflix are not amazing, but there are a few.
So, giving up cable:
PROS - very very cheap, you don't waste your day away with the tv being on in the background, no need to try to DVR your fav 6 shows at the same time. On hulu they'll show up in your queue when they're ready!
CONS - kiddo requires your help to get computer on, using your tv as a second monitor, computer and tv have to be nearby eachother or get a wireless HDMI signal (one time expense), NO LOCAL NEWS - I miss the news alot. I have to listen to the radio or get internet based news.
added: SB is right - if you love watching sports, then you will miss cable. Oh and also - we do a LOT of library renting. I've rented the movie Rio probably 8 times from the library. Heck it's free! For "newer" movies, we do Redbox ($1.28 a night).
OH and I forgot - Hulu and Hulu Plus both have commercials (many think that when you buy PLUS you don't get commercials. Not true. YOu just get acccess to more shows). Netflix has NO COMMERCIALS. YAY!