We have a dedicated computer hooked directly into our HDTV's VGA port, so we're able to watch movies that way. It's just not as simple as turning on the Xbox (instant on instead of waiting for a PC to boot) and scrolling to the movie we want to see. You have to boot up, you have to run updates, we don't have a remote for the PC so we have to go over and select what we want with the mouse, which is a pain for scrolling through movies when the TV is mounted up on the wall. I know, I know, get a remote for the PC.
I'm not saying I hate torrents. I use them frequently (less and less frequently, thanks to Hulu and Netflix) and some of the stuff I get ends up on our Xbox hard drive. It's just annoying not to know what's going to work on there and what isn't. But even without that small issue, Netflix is just a lot more convenient to me.