We recently cut out cable. Sort of. DH called to cancel cable and up our internet to the faster speeds. They eventually offered us basic cable and the faster internet for less than the cost of the faster internet by itself so we still have basic cable. DD (3 years old) is the only one that watches it. She watches Nick Jr in the morning sometimes. We bought a Roku and have a membership to Netflix and HuluPlus.
Honestly, I thought we couldn't do it. I am very surprised that we have adjusted so well. I love it! We are finding more interesting shows to watch on Hulu (The Supersizers Go was hilarious! If you like food shows). And another plus is my DD is not being subjected to commercials.