I LOVE my LQS! I love the atmosphere, the men and women who work and quilt there, who will help anytime with any project and actually take the time to make me feel like a valued customer and friend. I love the fact that they all pitch in when there's a project to be started or coordinated; I've seen everyone drop what they were doing (clerks and customers alike) to help a stranger find what they needed or to offer advice or help when there's a problem to be solved.
Yes, their fabrics are more expensive than Joanns but they are also usually better in quality. Not that I've never bought from Joanns, and I nearly always buy batting there. But on the whole my LQS is so far superior in both fabric selection and service that there's just no real comparison.
I gladly pay extra for the experience of purchasing fabric. I realize not everyone can do so, but with two incomes and no children my husband and I are in good position to continue to help local businesses whenever we can. Especially when they're more fun! :)