Windows (XP Pro) keeps wanting to install it when I go to certain sites. Things are running very smoothly for me now on this new (year-old now) system. I just didn't want to install anything that might have any adverse effect.
I believe Netflix uses Silverlight for its ON-Demand viewing. I haven't noticed any problems.
One thing I like about Netflix's On-Demand is that when you fast forward it shows images from the scenes you are fast forwarding through, so it's very easy to find where you want to go. Very helpful, if you don't watch the whole movie in one sitting.
I would hold off a while and install Silverlight 4. The beta of 4 was out in November so a final can't be that far away.
If you aren't visiting sites that require Silverlight to view the content, don't bother yet. However, Im sure MS will sneak it in in a browser update in the future to force greater adoption.