They are struggling to find a way to raise their prices (or at least create a tiered pricing structure) that doesn't immediately give everyone flashbacks to the Qwikster debacle.
Netflix got, after a few months of hooplah, a pass on that one because there wasn't a lot of competition yet, but I think it's a different story now; or at least becoming one. I run a Netflix blog on the side, and a lot of people comment their intent to cancel their subscription when I write about how certain shows are being removed (King of the Hill caused quite the storm). But I'm fairly certain very few people actually go through with it. $7.99 a month is an afterthought for most, especially compared with alternatives ($50/mo cable subscriptions, competition not being up to par, etc).
All that said, I believe I would pay considerably more for Netflix, or a better streaming service,(I'm guessing upwards of 20-30 bucks a month) if their content library increased alongside the price change. I think many people would likely agree.