To piggyback on coyoteaz's comments, he's absolutely correct. The analog channels (2-99) do not compare to their digital counterparts on sat, that is a given (analog vs digital). Your HDTV screen size may make them look worse than on a smaller, analog TV, but only you know how much of them you will be watching. Other than OTA, I believe cable has the better HD signal and even though OTA may be marginally better, the hassles that some people have with getting reliable signals makes cable a no-brainer for me.
That said though, based upon what you said, I don't think you would have any real problem getting OTA signals if you were to put up a decent antenna in the attic or on the roof. I don't know if your house is already wired for cable, but there should be a way to either use existing cable or stick new cable up through the walls to get reliable reception if all you really want/need are local channels.
I'm not sure what your wife's problem is with cable customer service. Have you/she had a bad experience in the past or are you just listening to the bad press? I'll admit that, like coyoteaz said, their CSRs can be brain-dead at times and many of them have no real knowledge of HD. In their defense, all most of them do is fill out your order request and hand you a box. If they don't happen to have HD (and how many can given their pay scale?), they don't tend to know too much about it, especially technical stuff like HDMI, Firewire, digital audio, etc., but you can almost always find one who does with a little persistence and a lot of patience. I personally have never had a problem with a technician sent to the house and I've only had a couple of problems with the service, mostly internet, in the 11 years I've been back in Phoenix. FWIW, I have digital/HD cable plus premiums, internet, and telephone service with Cox.
I also won't say that if you convert from DSL to cable internet service that you won't encounter periods of slow response, you may due to the way cable works compared to DSL. The only way to know is to connect and see what happens, though that requires buying a cable modem, pretty cheap these days. Everything else about cable is no cost to buy since everything is rented (and the DVR is worth every cent.