I ended up with both Blu-ray and HD DVD. I bought the obscure RCA HDV5000 HD DVD player (same as Toshiba HD-A1) for like $70 on ebay beause apparently no one knew what it was. Then I stumbled across a Sony BDP-S1 on clearance at Sears for about $150 so I've been in the game for a while. I still have the S1 and an S350 now as well as the Samsung HD DVD/Blu Ray combo unit, and 3 HD DVD players as well. I own close to 300 HD DVDs thanks to the fire sales and over 100 Blu-rays.
I almost never buy Blu-rays new. Its not hard to keep your investment costs way down. I usually buy them used at FYE using coupons and promos (I bought maybe 10 today with some Christmas money and they cost about $7 each on average). Often times I end up paying less for them than I would the new DVD version.
Picture quality is a no brainer IMHO. The picture is going to look good on a good HDTV.
I was an early DVD and HDTV adopter too so I guess it all goes hand in hand. I bought my first HDTV maybe 8 years ago (don't really remember). I do know I bought my first DVD player for 80% off when Sun TV was going out of business in 1998 (I was REALLY early in that game in min 1998, they had maybe 40 titles at Circuit City when I bought that player, and the average player was running upwards of $500-600, I was lucky to pay $150 for it and that player still works to this day). Ironically one of those Sun TVs that closed had one of the first consumer plasma TVs I ever saw around here a 42" model but I forget who made it, I remember there were handfuls in the country at the time, priced at a mere $20,000, I was there the day it sold for close to $10,000 (I just bought a 42" plasma for the bedroom for $400, talk about price decreases!).
I consider Blu-ray a worthful investment if you watch movies a lot. Honestly I own a lot of HDTVs but hardly ever actually watch TV asides from football games, I couldn't even tell you whats on prime time TV, however I usually watch a movie every night right before I go to bed. I have a rather large collection of Laserdiscs but I obtained it all second hand so I can't comment on how that format was from an investment standpoint.
Still if you look you can get a Blu-ray player for under $100 and they usually do good at upconverting, so to me it would be worth buying solely on that just for the added compatibility assuming you have an HDTV.