Blu-ray all the way.
I've tried both Netflix and lovefilm and found the image quality to be lacking in comparison. Plus I like to physically own things.
+1
But in fact I haven't actually tried downloads - I lack the technology to do so, apart from anything else.
I do still rent discs from Lovefilm, although I don't have much time to watch them nowadays.
Agreed with Ian's point about downloading being "an empty experience". I still find CDs a bit disappointing compared with the old days of LPs in gatefold sleeves! (I know I could still buy certain things on vinyl, but I must admit in that instance CDs are more convenient) :lol:
I suppose we'll have to get used to it, though - I don't think physical media will totally vanish but downloads will become the norm sooner rather than later. At least I won't have to keep finding space for stuff, I suppose.... :|