Microsoft are going to be announcing an official Netflix application for Windows Media Center. There have been 3rd party apps that have tried this before but this is an official addin.
It has features like Watch Instant, you can manage queues and use Search and Discovery. The package should appearing in Windows Media Center automatically and over the next couple of days. One issue with the application is that it does not work on Extenders (a platform that seems be taking a few knocks recently), although there is a separate application for Netflix built in to the Xbox 360
This is for Windows Vista only at the moment, hopfully we will see this feature caried over to Windows 7 at some point. With this being US only I check it out for myself but Richard Miller will have a full review on his blog which you can find here
I should have some more details and screen shots later
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Failure to support Extenders makes this useless. This is what separates MS from greatness, the lack of compatibility across products and neutering others from shining. Netflix Extender support should be a no brainer. Same deal with the Sports Channel shipping without Extender support – what a waste and a great way to limit the market. Crap – if they want to pimp Netflix on 360 to push Gold Memberships, just make that a requirement. i.e. Require your XBox Gold ID and Netflix ID to use Netflix on an Extender, but do not kill the exerience that my wife would want – MCE as a one stop shop.