30GB allows for an extremely high quality 1080 picture.
If it doesn't look much better than DVD, perhaps you need to recalibrate your display device, or perhaps you have something that isn't capable of displaying HD-DVD the way it should look.
Sure 1TB+ discs would be better, but support circuitry to be able to handle the data rates required for uncompressed video is a big unknown, especially at consumer level pricing. Getting all the studios onside, getting a working product out for the right money, all the DVD fabs having to totally retool etc.
Having a big disc is the easy bit, getting all the other stuff is a lot more work to get a product to market.