Cutting the cord essentials:
Apple TV
Netflix Subscription
Fast broadband Internet connection
The faster your internet connection, the better quality video you will get when streaming. In my area, Roadrunner has up to 15mbps for around $50 a month. This should get you HD video.
A netflix subscription is a must. Netflix offers a huge library of movies and television shows that you can stream for as low as $7.99 a month (way cheaper than cable). The selected is a little dated, but the quality and sheer size of the library is fantastic. Netflix can be streamed on apple tv, roku, and xbox.
If you want newer movies and TV shows, both apple tv and roku have you covered. Apple allows you to rent movies and tv shows directly from the box and pay via your apple account. The TV selection is limited compared to roku, but the price is nice at $.99. Furthermore, if you have a laptop, you can purchase or rent any movie in itunes and stream it to your apple tv. This allows you to have access to a much larger selection of content.
Roku has teamed with Amazon to offer purchase and rental of TV and Movies. The selection is good and HD is available as well. Furthermore, Amazon has recently released its instant watch for prime subscribers for $79 a year. Its a good deal compared to Netflix but the service is new and the selection is limited so far. Roku also gives you access to Hulu via subscription ($7.99 a month), which allows you to watch brand new tv shows.
Xbox 360 has the excellent Zune video service for TV show and movie rental and purchase. The selection is very good and HD movies begin streaming instantly with a good connection. Plus, xbox 360 also gives you the option of playing games, although the price is $100 higher than apple tv. Xbox 360 also has espn3 sports streaming for those of you who are eligible (eligibility is determined by your internet service provider and not everyone will have access to this service).
For myself, the biggest detriment to cutting the cord is live sports. If you are not a huge sports fan, you should be able to cut your cable tv and still have access to your favorite shows at a much lower cost.
For sports fans, I would recommend Roku because you will have access to sports channels to stream live sports from the NBA, NHL, MLB, and UFC. There are restrictions though. MLB blacks out all local games so you will only see road games for your favorite baseball team. Also, the services run around $100 each for the entire season. Its an enticing option but still not a complete sports package. Plus, the NFL currently doesn't have any Internet streaming options that work for these boxes.
For now, I am keeping Directv for the sports, but I will be closely watching as things continue to develop. For some, you can cancel your cable or satellite and have a great experience for a much lower price. For others, you may find that cutting the cord leaves you without access to some of your favorite sports programming.