I cut cable about 10 years ago and never really missed it. There have been a few things that I have wanted, so I recently set up an HTPC using some old hardware I had lying around and just purchased additional RAM for it and a graphics card that was compatible with my big screen TV.
Just using free services like Hulu, ESPN360 (free with my internet service, not everyone has this) and Crackle I can catch a good number of movies and TV shows without paying any extra for them. The one paid for service I'm looking at is some of the online sports viewing packages like MLB.tv. In this case my teams are not the local teams, so if I wanted to watch all of their games where I live I'd need to buy those services anyway.
In the end I don't miss live TV at all, never really did. But I'm enjoying seeing some TV using the online services and I'm saving over $40 a month doing it this way.