I have both the PS3 and TWC on demand, and watched "The Bucket List" a couple of days ago. This time, we went with TWC high definition on-demand. And the PQ was just great!!! I really enjoyed the extra resolution over DVD quality that the PS3 SD version would have had. As a bonus, the TWC on-demand movie came with captions.
TWC on demand and PS3 download movies we've recently watched
TWC HD, "The Bucket List", and "Lions for Lambs"
PS3-SD, "The Cooler", and "27 Dresses"
At this point, the PS3 store has about 450 selections, so it is becoming pretty viable. TWC has about 40 selections, including most new releases. More selections are available in SD. The Sony menu is superb, compared to the TWC menu.
Sometimes, I figure DVD quality from the PS3 is good enough, and is usually a couple of bucks cheaper than the TWC HD version. With our bandwidth, the PS3 SD version is available almost instantly, but we don't have enough bandwidth for the PS3 HD version instantly. A typical 2 hour HD movie might be a 4-6 hour download. I haven't seen captions on the PS3 downloads I've watched.
For the PS3, "27 Dresses" was a 16:9 crop from 2.35:1, but since that was in SD, the PQ was actually really good. "Lions for Lambs", TWC-HD was also a 16:9 crop from the 2.35:1 anamorphic source, so the PQ was not nearly as good as "The Bucket List", TWC-HD. I thought the PQ was equivalent to the SD 16:9 crop of "27 dresses" from the PS3. For both download services, there's no way to tell when a movie will be OAR or a 16:9 crop from 2.35:1, or open matte. For PS3 downloads, neither movie we watched had captions.
The PQ on "The Cooler" on the PS3 was also very good. The PS3 SD downloads at 2 mbits/sec, seem to match standard definition DVD at 5 mbits/sec, perhaps due to improvements in codecs in the past 10 years.
TWC also has standard definition movies on demand, usually $2 dollars less than their HD versions. These are either 640x480 4:3 or 640x360 letterboxed, so either you get a 4:3 crop, or mediocre letterboxed quality. Also, the TWC mpeg-2 compression shows more motion artifacts than the slightly lower bit rate PS3 compression. The PS3 standard definition downloads are 720x480, SD-DVD quality, and usually cost the same as TWC's standard definition downloads, so I would always pick PS3 SD over TWC SD.
The PS3 remote has better fast wind features, and chapters, and 120x, and is more functional than TWC on demand's "slow" fast forward. That same remote is much better at navigating the PS3 menu's. TWC needs a major overhaul on their user interface design.
At this point, I like the PS3 service -- keep the selection growing! Sony needs someway of allowing more than 24 hours if you start watching an HD download and realize that the download isn't keeping up with the movie. Also, they need to offer captions. Other's have noted that the PS3 doesn't have dolby 5.1 audio. That's not an issue for me personally, we're happy using our old two channel stereo system. But I would think for PS3 HD, the extra bandwidth for dolby 5.1 would make sense.
For 1.85:1 movies, TWC HD on-demand is almost blu-ray quality, so the TWC service has the advantage for HD -- but only if TWC offers movies in OAR. This is especially true if the movie was filmed anamorphically, and doesn't have the resolution to support a high quality 16:9 crop. Also, if you've got the big screen 1080 TV, which we do, than there's nothing like the experience of a wide screen 2.35:1 high definition movie.