We've been TV-free since June '05. Best decision ever! I feel so much more peaceful and calm without the boob tube.
We do still watch DVDs, tho. (We have netflix and also get free DVDs from the library, including choice TV shows.) I am noticing more and more that my tolerance for how many DVDs I can watch in a day has drastically lowered. (When we had a TV, we would do marathons of old movies that lasted all day long... I can't do that anymore!)
Our set up is perfect for us: we have a DVD player hooked up to a projector in the living room. And a HUGE screen that rolls up when we're not watching anything. Movies on the bigger screen are perfect, and we don't have the same "focal point" problem as we did when we had a TV (b/c the screen rolls up to the ceiling and isn't noticeable when not in use).
The hardest thing for us to give up was sports. We're big football fans. My DH watched the superbowl at a sports bar this year (not the best environment in the world, but we didn't get invited anywhere -- I didn't go b/c the smell of beer and cigarettes is GROSS, but I did follow the game online a little). We follow our football team online via internet radio, but it isn't as good as watching games.
However, we both still agree that being TV-free is worth it!