I'll put this one in Home Theater instead of Water Cooler, as it really does have to do with HT stuff.

Next Tuesday the PS3 will be able to install a Netflix app instead of having to use the BD for streaming. The new interface will run on the Cell processor natively, instead of inside a Java virtual machine, so it will be much quicker. Also full browsing of all streaming titles will be possible, and a text search. (Apparently the app is already available for Canadian NF subscribers.)

Additionally, on Monday Netflix will be making some HD titles available in 1080i, and upping the sound to Dolby Digital Plus 5.1. The PS3 will be the first device to support both of these formats.

That is awesome news.

Hope the rooks, ESP the oldest ones, get at least the 5.1.

All models will be getting all features.

Netflix doesn't have their blog updated yet, but the Playstation one has this: http://blog.us.playstation.com/2010/10/14/netflixps3/

Nice!

How does the HD streaming work over wireless? Can you let it cache for a couple of minutes first so that it doesn't get stuck or lower quality, or can you really only do this over a wired connection?

Over wireless, Netflix caches to create a buffer. I stream NF using a Samsung BD-P3600. The High def stuff looks about as good as a cable high def channel. I've not yet had it choke on the stream and have to buffer during playback, although the picture might occasionally stutter.

I hope NF rolls out the increase sound and picture resolution to other TV playback devices (mine included).

Netflix steaming always buffers. The playback devices pick the video quality based on how quickly the initial buffer fills. During playback the quality can increase or decrease based on current network conditions.

Even better, Netflix just gave Sony an updated version of the app to be distributed on Tuesday, and it supports 1080p instead of just 1080i.