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For me, it is probably all or nothing. We lived without TV at all for about 4 years when we first moved to the Bay Area (only one channel came in by antenna, and poorly) and we were fine. Then we moved and decided to switch to cable internet from DSL and the TV initially came with it and by the time we had to pay for it, we wanted to keep it.
While about 70% of my TV watching could be replaced by a home theater setup with Hulu and the network web sites (Netflix doesn't actually take the place of anything I would otherwise watch on cable) frankly there is something to be said about not having to maintain a more complex home network situation, not having to go seek out everything I want to watch, and having the flexibility of wandering off to watching things I'd otherwise never learn about or just flip through.
If money were tight, it would be the first thing to go, but it isn't so I've kept it even though it really isn't worth the cost.
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