I may be a luddite, but I still prefer DVDs to Instant Netflix. I don't have a very fast internet connection, (I have the cheapest DSL you can get from AT&T) so I get only two star quality when streaming. I don't mind if what I'm watching is not really affected, but sometimes the movie really suffers. However, I love having an alternative to TV, and I love having something to watch when the DVD is in the mail, so Instant Netflix is a great feature that adds value to my membership.
I like using my Instant queue as kind of a overflow for the DVD queue. I have already maxed out my queue, so I frequently add things to Instant that I don't want to forget about.