Netflix streams HD when possible, and most people I know prefer to download non-HD versions to reduce the wait time. I don't know how Netflix's compression is, though, so it might work out not to be that much more even when it's HD.
Netflix's compression looks (unscientifically) pretty close to standard-def DVDs to me.
Sure, it'd be nice to stream 1080p content, but I know my pipe can't handle it, and I'd much rather watch standard-def content right now than wait 2 days to watch the movie I want in glorious high-def.
It's also why IMHO the PS3's movie rental capability is laughably unusable. When someone goes onto an on-demand system, odds are they want their content right the hell now. The PS3 only supports downloading your rentals.
Now, what would be interesting is a standard for storing streamed video. This way I can rewatch, rewind, fast forward, etc, without hitting my connection again, but also have the perks of beginning right now.
Netflix only streams HD for certain movies and only if your bandwidth is good enough. If your pipe can't handle it, you will indeed be getting DVD-quality video.
