My experience with Network Shares Vs Media Server is that it’s sometimes nice to have BOTH. ;)
Network Shares require you to be a little more pro-active in organising your shared media logically, placing Videos into appropriate folders, categorising them, etc. You don’t have to do this but I imagine it will fast get confusing when you have a sizeable amount of media.
Something I’ve noticed is that even when my Network Shares are playing up (as in, Vista decides it doesn’t want to be visible on the network), I am still able to ‘see’ (and play) from the Media Server. I guess that’s the benefit to UPnP.
Media Servers do a lot of the categorising for you, you can be a bit more selective about what media you wish to share on the network and they usually open up the possibility to stream other content from the internet.
TVersity (free edition) allows you to stream free internet radio (ShoutCast and others) quite easily. I have local rock radio station KROQ configured on this manner. The only downside is that TVersity doesn’t seem to grab the Artist / Track info from the streams. The Pro version of TVersity also allows you to stream Hulu and other web tv content. Sadly, my DSL is too slow for video streaming. Also, the TVersity custom menu system requires you to get your hands dirty with XML in order to customise the folders that the WD TV Live sees. The default menus work fine but if you’re a minimalist tweaker, it may frustrate you.
PlayOn, another popular media server, allows you to stream your Netflix queue. Not had any experience with that software but if I had faster DSL I’d be very interested.
So the answer to your 2nd question is: yes, you will be able to stream “some” internet content from your laptop to your TV but it depends on what streams the software supports. :)