Sara at Sara Inklings suggested Hulu for free movies.
I watched Masterpiece Theater from my computer today. Public Broadcasting has quite a few programs that can be watched over their site. The only problem I have with watching these is that my computer isn't hooked up to my television and so I have to view them directly from my computer. I asked at Best Buy if I could connect them and the cable is expensive ($80). The salesman wasn't sure if it would work with my Dell Inspirion Netbook - he said both my computer and television would need to be HD.
I've also been borrowing DVDs from the local library. We can take five out at a time.
If you have any other suggestions, please leave me a comment and I'll add them to this post.