I think a download/streaming hybrid device and service could solve many problems and would be very valuable to consumers. Imagine a device that worked with your Netflix queue to download HDX quality videos to the device and hold "X" number of titles based on your plan.
If you had a 3 at a time package, you would have 3 titles on the device. When you watch one and delete it, the device immediately starts to download the next title so you always have at least "x-1" titles ready to watch in high quality with faster turn around and more convenience than physical discs. I would personally pay MORE for this service than I would for a comparable 3 at a time disc package from Netflix.
Even if the price was the same, Netflix would still save money on shipping, loss, etc from physical media.
Now imagine if this was also a built-in feature of one or more next gen game consoles..... (drool).
The point is that you may wish to limit the conversation to streaming, but there are fairly simple ways to increase the convenience of the all you can eat offerings from Netflix and get the quality advantages of downloading.... and in a way that is very seamless for the consumer.