That's pretty much the same view I had of the whole cable thing. I was spending $75/mo on cable, or $900/yr. I figured I could cancel my cable, buy an OTA antenna and build a DVR PC with the savings. The antenna was $40 and the PC was $700 (i3-based PC with Win7 and a Hauppage 2250 dual tuner). I run Windows Media Center which has been incredible. I PVR pretty much everything I want and have more programming on the drive than I could ever watch. I broke even after 10 months and that was 2 years ago.
Best part is, the picture quality kills cable. I'm fortunate that I live in Toronto on the 20th floorof a condo so I can pick up 20 US and Canadian channels but I have an AppleTV as well which I solely use for Netflix.
So I went from $75/mo to $7.99/mo and I'm happier than I've ever been.