I am happy to say that about 2 months ago my family cut the cord on our cable tv service. We have switched to downloading all of our TV shows and Movies. We couldn't be happier. Here is the setup we are using so if anyone else is interested in saving $$ they can see how I did it.
First I already had the home wired with cat5 for a network, so I don't have to use wifi to get tv to the kids bedrooms. I have extensive tcp/ip experience so I knew what I was doing regarding networking, even so it wasn't hard and a person that understands how to set up a computer with a static ip would have little problems.
We already had a home server so I only had to add some storage space to it. All the TV shows are stored in one share, and the Movies in another. I am using windows home server as the os on the server, I was already using it to share music in the house and to do automated backups of our machines.
I decided to get 3 Acer Aspire Revo netdesk computers based on a post on Lifehacker, one for the family room(65" DLP) and once fro each of our 2 children's rooms(22" LCD). I set up Ubuntu and XBMC on them by following a great tutorial linked off of the XBMC forums.
Once I had XBMC running on them I needed content. I started with Torrents on a dedicated machine, but it was hard to keep a good ratio when I was starting out needing lots of back content that we had stored on our tivo, so I looked into Usenet, Newsgroups have come a long way since I was downloading gigs of music years ago. NZB's have made it easy. So I set up SABnzbd+ on the torrent machine to do the downloading, and got accounts at the major NZB sites. I then set Sick Beard to search for and send the NZB's for my the TV shows we watch to SABnzbd+. I am using CouchPotato to do the same thing for movies. Once i had them set to look for my wants it's even easier than dealing with rss. Shows get downloaded unrar-ed, renamed to something more XBMC friendly, and moved to the correct share on the server. I am using torrents as a back up for the shows that don't come across usenet.
I could have set all that software up on my server instead of a dedicated box, but I had the hardware and I didn't want to mess with the machine that is responsible for my backups.
Any questions on my set-up please ask.