We don't have cable, and it's just fine for us. I love that my son only watches PBS shows, because he is exposed to far fewer ads than he would be if he watched all the other kid cable channels. Sometimes I regret not having a DVR, but usually I can catch up with shows that I care about over the Internet.
I have a friend who recently quit her Direct TV. They are using a combination of Netflix, Hulu Plus, and an over the air antenna. It's worked for them, and I think they pay about $16 a month for all of it.
If you buy an over the air DVR, it will cost you about $400 if you get one without a subscription fee. I think Tivo sells a much cheaper one that does have a monthly fee. But maybe those are options to explore if you find the DVR portion difficult to give up?
Overall, I'm pretty happy with what we have. I know that I would watch far more TV if I had the other options. I spend enough time on "media," between TV and Internet, as it is.