How can most people tell the difference between DVD and Blu-ray, when they watch a 37" plasma or LCD from 15' away? That's how video is viewed in most homes that I've visited. Until that, and the "just good enough" philosophy (the Flip camera crowd) is addressed, real HD distribution will languish.
For me, watching Blu-ray on a 154" screen is heavenly, especially from 9' away. I have a lot of DVDs, too, and upscaled, they look about as good as what I've seen in the local Loew's theaters, but a good BD title can look breathtaking.
My big beef with Blu-ray is all that Java garbage they run. Sometimes it takes 7 minutes to get to the main menu from the moment the disc drawer closes. Other titles can be playing in mere seconds. It's extremely annoying when you want to show something to some guests without making them wait to the point of leaving the room, bored.
Oh, uhh.. one more thing... when all the ISPs impliment bandwidth capping and pay per gigabyte metered billing, all the streaming media will be out of business, literally in one night.