This morning Netflix announced via their blog, plans for their DVD-only service Qwikster is to be shelved. Netflix CEO Reed Hastings explains the cancellation below, likely a response to the overwhelming negative feedback and membership cancelations caused by the fee hike and two-headed service plans...
It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs.
This means no change: one website, one account, one password... in other words, no Qwikster.
While the July price change was necessary, we are now done with price changes.
We're constantly improving our streaming selection. We've recently added hundreds of movies from Paramount, Sony, Universal, Fox, Warner Bros., Lionsgate, MGM and Miramax. Plus, in the last couple of weeks alone, we've added over 3,500 TV episodes from ABC, NBC, FOX, CBS, USA, E!, Nickelodeon, Disney Channel, ABC Family, Discovery Channel, TLC, SyFy, A&E, History, and PBS.
We value our members, and we are committed to making Netflix the best place to get movies & TV shows.
Thank you.
-Reed
Although this is likely the right decision, many questions still linger whether Netflix has damaged their reputation amongst previously avid and loyal subscribers too much with what many consider mismanagement. Chime in about what you think about Netflix's flip-flop below.

Sheex Bedding
Oh Netflix, why did you have to go and scare us like that? Now, let's talk prices...
Those plans were screwy, yes, but they listened to their customers and changed. That's a pretty neat thing! Even with the price hike, it's not that bad for what you get. And they're STILL the only game in town unless you have a dedicated media computer....
While I am happy they listened to their customers, and made the right choice in the end, I fear it's too little too late. I used to visit Netflix at least a few times a week, and I have since been so annoyed that I unknowingly stopped visiting for the past month.
I'm glad Netflix came to its (their?) senses, at least partially. But the fact remains that the whole Qwikster thing was a major mistake in the first place, and one that (IMO) really should have been foreseen long before Hastings wrote and sent that terrible non-apology apology email. Do CEOs send drunken emails late at night? Perhaps so. I'm grudgingly staying with it for now (DVD service only; I can't stream worth a darn, and the streaming selection is still pretty limited), but where I used to think Netflix was the best thing since sliced bread (ok, if that's really true, then my life could probably use more excitement), now it's just another utility with a monthly bill. The bloom is off the rose, Reed. Don't muff it again or I'm leaving.
As Sagaka said, the bloom is definitely off the rose. Since I canceled my subscription, I've discovered other entertainment options, leaving me in no particular hurry to renew with Netflix just because they pulled the plug on a decision that everyone else instantly recognized as bone-headed.
I think the best thing Netflix can do right now is stop scaring users away by changing things. Keep it like it is right now and focus on maintaining streaming arrangements.