Netflix for streaming Lovefilm for other stuff
If you're purely after a streaming service then go with Netflix, it's investing significant amounts of money in acquiring content for it's UK service, which will mean in the next few months it will start to be comparable with Sky in terms of availability of movies/TV and as described the quality of streaming is decent. At present Lovefilm is not investing that kind of money so will generally only be streaming library titles (stuff that's a couple of years old or more) and again as described the streaming quality is only passable.
On the other hand Lovefilm (which I'm a subscriber of) is great if your happy to keep it old school and use physical media, particularly if you use it for renting games (which I do.)
Incidentally the Lovefilm interface trialled above is horrible and is the same as the PS3 interface, however there is much improved interface for the Xbox360 which hopefully will roll out on other devices sooner or later.
I imagine if Netflix makes major in roads in the UK, then we'll see Amazon pony up some more money to make sure Lovefilm competes in terms of quality of titles, particularly if they see it as a way to push their Kindle Fire devices