Actually there is no reason why you couldn't stream Netflix on a phone.
I can stream a movie from netflix on my PC at home where I only have roadrunner "light" which is 768kbps.... that's .7mbit.
My phone consistently pulls 1200-1800kbps... twice as fast as my home internet.
The quality isn't that bad at home, CERTAINLY wouldn't be bad on a 480X320 landscape screen resolution. Running at native resolution it would look very crisp. Would just take alot of buffering.
Go watch a youtube video that you know the source of is high quality on your phone. Change the quality setting to "high quality" if you have the newer youtube app. Look at how crisp that is... I can bare that
If I've read correctly... youtube high quality streams H.264 at 864X480... when shrunk down to our screen size the result is beautiful
and bandwidth happy too on a good 3G connection.
There's also an app out there called "Phoneflicks" that allows you to add movies to your queue... search movies, read reviews etc.
The windows mobile officially licensed Netflix app also showed movie trailers for the movies you would want to add to DVD or Instant Queue.