Our reasoning was this: Netflix lets us have the "background noise" programs that we don't really care about for $8/mo and it has a big enough catalog that it's worth it. We can purchase everything else from iTunes and at our rate of "new show consumption", the $60/mo is better spent being put towards iTunes purchases where it's ad-free, on demand, and able to be moved to devices. For TV shows, that's about 15-20 episodes a month purchased without affecting our previous budget. In practice, we don't watch half that many new shows so we'll be saving around $30/month and building a catalog of content that we semi-own where the value increases the longer we use it. Cable/Sat services don't build on themselves like that. Plus, the AppleTV runs at 6 watts where the satellite receiver ran at 10x that, we might even see a lower electric bill.
Households that live for watching TV aren't going to be swayed that easily, but they're easily spending twice as much too.