I'm a user of both formats. I like them both. Have a PS3 and a HD drive for the xbox. I think everyone should have that combo... invest in a PS3. (the HD drive is only 120 bucks or so for the 360--and chances are you already have a 360, right?)
Honesty, I watch more movies on the PS3 than play games on it. In fact, I really DON't play games on it--it upscales norm DVD;s great and BLU looks amazing.
Formats are honestly the same. Deciding factor is library. HD is capable of better menu interactivity and potentially better extras (sounds silly---but check out the screen-in-screen extras on the movie 300, bluray vs hddvd side by side...if you have both players and bought the BR version you will feel gipped). BR has the capacity, but thats a moot point as well. (blade runner comes in the same amount of discs either way, for example). NOthing has really come to capacity on either format. This leaves library...I'd have a problem if I had to throw out either my HDDVD player or PS3. Take out the only snag in the equation.. get both
Truthfully, reg DVD upscaled through a good player is just fine.