HD-DVD is officially dead.Which means that the next-gen physical format is Blu-Ray.
But seeing as the discs are massively more expensive (quick check - DVD of HP:Azkaban is £7, Blu-Ray is £17), I'm not convinced that it's going to be that successful for a while yet.
Having bought an upscaling DVD player, and been ecstatically happy with the image that that provides, I don't think that I'll be rushing out to buy a Blu-Ray player for the near future.
Possibly when the current DVD player dies.