Since some of you sound like you know what you're talking about

this might be a good place to ask for some advice about something I've been thinking about lately.
Here's the background: We don't have a t.v. at my house and don't want one. But we do have movie night pretty often. We have a DVD player hooked up to an LCD projector that projects onto the wall or our "movie room". We also have a DSL connection, couple of computers and wired network in the same room.
We previously subscribed to Netflix, but got so many unplayable DVDs in the mail that we switched to Blockbuster. Blockbuster's been a little better, but the idea of downloading movies instead of getting a DVD in the mail sounds really good.
Here's the question: given our current setup, what would be the best choice in hardware/software to be able to download or stream movies instead of getting them in the mail?
Thanks in advance for any thoughts you have on my question!