Cait and I watched the two-part pilot to Lost last night, as purchased on the iTunes Music/Video Store. I was initially quite skeptical because of the resolution: 320x240 is pretty low, especially to watch on a laptop.
Actually, when played at full screen, the shows looked pretty good. While Apple is using a pretty low resolution, their encoding (presumably H.264) is top-notch, with no noticeable artifacts other than slight blockiness because of upsampling (which was quite reasonable).
While I’ll probably pick up the DVDs to the first season of Lost to watch the rest, there’s a good chance I’ll go back to iTunes if I want to catch up on this season.