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My friend tried them first and canceled them because of the reasons above plus they kept saying his games got lost on the way back to them so he would have to wait forever. I don't know anyone who has signed up and kept it. The best alternatives?
If you have a PC then use http://www.gametap.com/. It isn't perfect but it's a damn good service for a good price.
I trade all my games on http://www.goozex.com/ and I've been having a pretty good experience so far...
Ive never had a game get lost on its way either way but there is a way u can have whoever ur postman is be grilled on missing games in case hes a thief. I reported a game lost one time because it had been a week and they gave me a link to describe my post man and all this other stuff to report.
I haven't got Super Mario Galaxy yet, even though it shipped out 12/24, so I might mark that lost, too.
Even with recent issues, I've been very pleased with GameFly over the past year I've been a member, so I'd say stick it out and hopefully things will normalize again. I love the 10% discount and the $5 credit, plus their prices on used games are often much lower than GameStop's, even without the discount and %5 off.
Oh, and they were very understanding when I told them I didn't get the $10 Thanksgiving credit e-mail, so that's something else that makes them awesome. I bought Call of Duty 3 for free with that $10 credit and my $5 credit. :D
My ship times have been steadily improving since they opened the dist. center in PA too. Now I'm reading about them opening one in Tampa. I think Gamefly is leading the field in online game rentals and really the best service out there. All the added feature like keep it, rewards etc. also really make it worthwhile for me.