I also had this problem and nothing here fixed it, however the following did:
If your network is using dnsmasq, for most of you behind personal firewalls at home this would apply, apparently the app fails at connecting to Netflix servers this way and fails. Open your network settings and manually add or change your dns server to an opendns server or google dns at 8.8.8.8. This fixed things up for me.
Referenced: http://jpwhiteblog.net/2011/02/09/netflix-stalls-on-ipad-problem-resolved/
If your network is using dnsmasq, for most of you behind personal firewalls at home this would apply, apparently the app fails at connecting to Netflix servers this way and fails. Open your network settings and manually add or change your dns server to an opendns server or google dns at 8.8.8.8. This fixed things up for me.
Referenced: http://jpwhiteblog.net/2011/02/09/netflix-stalls-on-ipad-problem-resolved/