I have both Netflix and Hulu Plus.
Between them and the shows I can stream free with my Amazon Prime membership, I don't watch much "real" TV.
Which I would recommend depends on what your family watches most.
Huge selection of movies. Not all are available for streaming, but I never have to look far to find something to watch. The choices for instant viewing change frequently too. I think this has to do with licensing.
Decent selection of TV. Not current season, as you have noted, but I like older shows anyways.
No commercials (Hulu has limited commercials...not too bothersome)
Hulu Plus pros:
Current season TV. Pretty good selection, and episodes are available a week after they air.
Better viewing experience as far as quality adjustment. Not to get technical here, 'cause I don't know how it works
, but when my connection slows, it doesn't really pause. It will lower the quality slightly with no delays. Netflix will stop and re-buffer at the lower quality which can take 5-10 seconds.
Overall quality for both is excellent for me.
To recap: Netflix for movies and older TV shows. Hulu Plus for current shows.
You could actually subscribe to both for around $15/month.
Other options would include the aforementioned Amazon Prime. I have an account for work that was $79 for the year and includes a pretty good selection of free movies and TV shows. I actually got Prime for the free 2nd day shipping and $3.99 overnight.
You can also watch a lot of shows for free on various websites. I watched several seasons of one of my shows on Fox.
I bought a new Samsung LCD TV back in January and still don't have it hooked up to the cable. I watch everything on it through the internet.
Hope this helps,
P.S. You might get more responses if you post this in TV and Movies. You might ask a Mod to move it for you.