I had booked it for an evening this past September (2013), but while there we decided to go to F! on a different night. So we went and had great seats. I ended up canceling the FP!
It's only good for the night of your reservation, so if it is canceled then you are just out of luck and yes you still have to show up for your ressie.
We were so glad we ended up going the night we did and canceling because the weather changed on us and it ended up raining from 2PM on. We went to a different park that day so I'm not sure if it they had canceled F! or not.
We go every September and in 2012 we went and even were in the stadium seating waiting on F! to start TWICE during our trip and it was canceled BOTH times. We eventually did get to see it on our 3rd try. They only cancel if there is heavy rain and/or lightening. If it's just barely raining they will still have it. This was told to me several times by CM's. It is very disappointing though to have to walk back out of that theater when it is canceled like that. My kids were upset. Heck I was too. But I know Disney has no control over that. We almost didn't even try to see it this year cause we didn't want to sit there, again like in 2012, and wait 30 mins for the show to start and then they delayed the show another 20 mins in hope it would clear up and they could have it, all to only end up completely canceling it.
Both times in 2012 September when it was canceled it was due to lightening. It wasn't even raining at all.
I was very glad we didn't do the package.
But we also found we didn't need it either. We got there early enough to get a good seat. Although really I don't think there are any bad seats per say.
If you don't want to wait very long though the package is great cause you can show up 20 mins or less before the show.
I would suggest watching the weather while there. If you are only at Hollywood one night then you won't have much choice, but if you go more like we do, then you may be able to change things around based on the weather.
If you end up canceling just be sure to do so the day before
Have fun!!