How can I play Netflix movies on my iPhone?

UPDATE: Netflix has released its iPhone app version 1.1.0 which streams movies from subscriber instant queues over Wi-Fi or 3G connections. Download and install the Netflix iOS app for free.

UPDATE: At the WWDC 2010 keynote speech Netflix confirmed that a streaming video iPhone app will be released.

Right now you can't stream movies from your instant queue on Netflix to the iPhone. The minimum requirements listed by Netflix to watch instantly are:

Windows XP with Service Pack 2, Vista or Windows 7
Internet Explorer 6.0 or higher; or Firefox 2 or higher
1.2 GHz processor
512 MB RAM

An Intel-based Mac with OS 10.4.8 or later
Safari 3 or higher; or Firefox 2 or higher
1 GB RAM

Trying to play a movie on the iPhone results in the error, "streaming is not supported for your operating system."

Netflix streaming uses Microsoft Silverlight. Although Microsoft demonstrated that iPhone-compatible video (H.264) can be viewed using Silverlight on the iPhone in November 2009, Netflix has yet to add this feature.

Rumors of a Netflix iPhone app have surfaced in the past. As of March 2010, Netflix is gauging interest from users to determine whether or not it will move ahead and develop a movie streaming iPhone app for subscribers.