The issue is that most people still have old TVs, and aren't really in the market for something new. They are waiting around for "prices to drop" and aren't wanting to upgrade right now. Agreed, retailers are pushing HDTVs hard, but if you look at sales figures vs. predicted sales for HDTVs, they have consistently been very dissapointing for retailers. One stat I heard is that at current sales, HDTVs won't acheive 60% of the market for 15-30 years. If most people are that slow to adopt HDTV, I don't see any bigger hurry to adopt high-def DVDs. Especially when you are dealing with people who just stopped buying VHS about 5 years ago or so. They just upgraded, so why do they need to again? And the whole "format war" scares people off quickly. They remember they or someone they know got burned by buying a betamax, and they don't want to go through that again.

It still seems like the laserdisc to me-expensive, high end, high quality, and not used by the vast majority of the people.
But it appears that the blu-ray is winning, at least they have the most films and units out there, and thats what most people look at when they buy.