I spend my points on DLC and Arcade games. I haven't grabbed anything from netflix or, the Zune marketplace. My latest transactions?
Dead Money (New Vegas DLC)
Case West (XBLA Dead Rising thing)
The Misadventures of P.B. Winterbottom (XBLA Original)
Stacking (XBLA Original, not fully unlocked)
Nobel Map Pack (Halo Reach DLC)
Pinball FX 2, Marvel tables (XBLA Original, not fully unlocked)
Pinnacle Station (Mass Effect DLC)
Several Marilyn Manson tracks (Guitar Hero: Warriors of Rock)
A recent birthday has left me with a lot more MS-points than I normally have...and I still have enough to unlock more things. I am likely going to unlock Stacking and the Marvel Pinball tables. Or I may go with option C: hold onto my remaining points until Mass Effect 2's next bit of DLC is released.
If anyone has read this far and has 800msP, I strongly suggest downloading the trial of Winterbottom and Stacking. The Pinball FX2 is also addicting. Case West is difficult and the Noble maps don't show up in MM-SWAT yet.