Here's what you're looking for.
28 million Xbox 360s, 17 million Xbox Live members as of January 2009. However, this is likely the number of Gold and Silver Live members, given the way MS has announced these numbers in the past.
The Silver package, which is free, does not allow for the Netflix app. You've got to realize that a lot of people just don't bother taking their Xbox 360s online, or paying for the privilege, at least.
I understand what you're saying. 1 million activations out of 28 million consoles ain't exactly stellar, but it's pretty good for the first few months. It's not like the entire userbase is suddenly going to flock online and sign up for Netflix right off the bat.