Watching movies at the screen size I do (92" diagonal 16:9), DVDs are inadequate. The resolution is too low and the color fidelity isn't there. I hear a lot of people claim that with proper scaling and higher pixel counts on digital displays, DVDs can approach HD quality. That's true in part. Closeups on reference DVDs look outstanding on my setup. Medium shots look really good. Watch any far shots with lots of small details, and you'll see a huge difference between DVD and HD. DVDs look soft and muddy in comparison.
HD on disc will start out as a niche format, but sales of HD displays are booming. Whoever wins in the end--HD-DVD or BluRay--will do just fine because morons like me will buy the first deck out the door. If there are a significant number of titles available on HD-DVD that I can't get on BluRay, then I'll just have to buy both.
Also keep in mind who's pushing HD on disc; it's not the studios. They're happy to sell you the same content again, sure. The real push is coming from manufacturers who can't profit on DVD player sales anymore because Chinese manufacturers are flooding the market with $40 DVD players. Manufacturers need a new format so they can sell expensive decks.
To address a few points I'm too lazy to go back and quote:
Claiming laserdisc failed because it didn't offer enough of an improvement over VHS is silly. The benefits over VHS are huge on a good TV. The best LDs I've seen are superior to most non-anamorphic DVDs. LDs failed because they're 12" wide and many movies required two or three discs. DVD took off not primarily because of image quality improvements, but because it's a 5" disc that reminds consumers of CDs, which they loved to death until they started raping content providers by downloading MP3s. Lazy consumers prefer convenience to quality. That's why microwaves are so popular.
Claiming HD has no advantage over DVD because one D-VHS movie doesn't look all that great is absurd. Having had HD via cable for about two years now, I can tell you that the best HD broadcasts--which have lower bitrates and overall lower quality than D-VHS--completely decimate DVD on a good setup. View a D-VHS tape such as Fight Club, and you'll see what HD can do. As digital displays evolve to support 1080p, then you'll really see some shit.