The lovefilm feature was the reason I got another blueray player. I'd be very surprised if they withdrew that service as it's all over their advertising as a feature.
It works really well. the streaming is perfect and the video quality, though it can vary a bit from film to film is DVD quality. A lot of the films I've never heard of, but since I've had it, they do seem to have added more well known films, though many of them are a few years old. They seem to be adding all the time.
If you want to see what films they have, go to the lovefilm website and see what they offer as free films on their watch on line section, as most of them, though not all, seem to be available via the Sony link.
You need to have an unlimited lovefilm subscription which start a £9.99, though I joined via an Amazon link just over a year ago and I got it for a £1 cheaper. You still get bluerays through the post and the download service is a free extra.