I watch a fair number of movies every week but I really have no use for DVD's or HD-DVD's. My local cable provider provides a lot of HD content and the On Demand HD selections are expanding.
I no longer rent or purchase DVD's. Although they look "ok" on my 52" Mitsubishi, they are disappointing compared to the HD content I regularly view.
The optical format is arguably not the best format for backups. The only advantage I see is portability. Most people with a decent home theater setup do not care so much about portability.
Let the manufacturers dispute this while IP TV evolves and makes the whole point moot. You know somehow, someday, regardless of DRM, we're going to own huge hard drives full of HD movies delivered via IP.