Except standard def, as good as DVDs look, is not HD. People don't buy because it really is good, they buy because they are under the belief that it looks good. I don't know how many people are totally psyched about their 1080p 37 inch LCD, but the numbers are astronomical. Depsite it nearly being impossible to have any visual performance boost at normal viewing distances, people swear that they must own 1080p display and will actually pay more for those displays.
Likewise, HDTV is a buzzword that implies quality. The difference is that Blu-ray/HD DVD actually deliver upon that quality.
Yet, at the end of the day, someone who may be buying any discs, in either format right now may be painfully aware that there is a format war under way and that very likely will temper their purchasing. The mere existence of this war is hurting sales of players, adoption of the format, etc.
This isn't audio people. People aren't giving up 50"+ displays in favor of things they can stick in their pocket - they want both. But, the big 50" flat panel is what the Jones' have and you better believe, 50" isn't going to cut it for many. So, it is all about the big display, with the best source - and HD is it, whether it is HD cable, satellite, and/or HD optical discs.
DVD? Sure, that's a plus for some, but not all.