I have a ~1.2 Mbs connection precisely because of latency. It's the best DSL connection I can get in my crappy apartment (because of the wiring) and when I had cable it was maddening to try to get work done over that connection. I chose 1.2Mbs down / 768kbs up and consistent latency over 8Mbs down / 1.5Mbs up with variable, often very noticeable latency.
However, you're wrong that such a connection is ample for all purposes. Streaming video sucks; I often have to let things buffer for a while before I let them start. Streaming Netflix is completely out of the question.
As for competition, if you live in an apartment where I live, your choices are cable or crappy DSL. I'd love to have U-verse, but only half the people I know in my area can get it at home. I don't know anybody who can get it in an apartment. The limitations of my slow DSL connection are so frustrating that I may switch back to cable and see if the latency is better these days (or give up on logging in remotely.) It's ridiculous that the local cable provider has a monopoly on broadband in most households where I live. (Even with good wires, I think the local DSL tops out at 3Mbs, which isn't broadband in my book.) In places where U-verse is available, the competition is between two giant companies who see competition as an annoyance -- I wonder how keenly they compete against each other? Unfortunately, in the United States, people still think the government can only hinder competition, never enable it.
[Edit: My DSL connection is not really 1.2 kbs down / 768 kbs up as I originally stated.]