I Disagree.
Okay... Well, you write like you're a smart guy. That may be. However, there definitely IS a format war going on. High Definition is in, and not just a niche market. Larger TV sets require higher resolution. DVD simply can't provide those kinds of numbers. So there has to be a whole new format. Whether or not it will be HD DVD or Blu Ray or something completely different is a whole other discussion.
Am I glad that a change is coming so quickly? Not really. But it is bound to happen, and at least you can still play your regular DVDs on either of player. To argue with you're major technological jump segment about VHS to DVD being huge because it's a whole new looking device, I think that has nothing to do with it. Are you telling me you'd rather have a whole new machine that CANT play your old DVDs, but make the discs loook different? I would be quite pissed off in that case.
And yes, there was a format war before with VHS and Beta tapes. This will undoubtedly be the case yet again for HD DVD and Blu Ray. Personally, I think Blu Ray is the obvious winner. It is theoretically better, holding 25 gigs per layer and allowing multiple layers, while HD DVD only holds a mere 15 gigs per layer and being limited to 2 layers. Had the Xbox 360 come equipped with HD DVD built in, the war may never end. Since the PS3 does come with Blu Ray capability, the format is not going to just disappear. It will definitely be around for as long as the PS3, which will be quite a while.
All in all, high definition has not failed, nor will it fail. Everybody wants higher quality video. One way or another high definition is in. It's just a matter of time before one specific format is picked and then the prices will finally begin to drop to a reasonable level. It has already begun. And the discs themselves are actually quite reasonably priced in comparison with regular DVDs.
Long Live Blu Ray!