Blu-Ray can hold a lot more memory, so Blu-Ray is a lot better. Blu-Ray has a better quality and has RAW sound, unlike HD which uses a compressed sound. This way, you can get 7:1 or even 8:1 on your home theater, rather than the standard 5:1. Right now, I'm actually going to say that HD is a better deal only because Blu-ray is taking its time in getting more popular in the market. Blu-Ray has grown in popularity and many of the new movies are released in Blu-Ray. But I myself would still prefer Blu-Ray over HD

Blackmox is right. HD has about 20gb of memory on each dvd while Blu-Ray has about 50gb. This is also beneficial for video games. Since the PS3 uses Blu-Ray it has a lot more capacity then the 360 games do. But all these advantages will probably show up later on.

I would go for Blu-Ray as well, because the capacity is so much better, and it might win the race because of its better quality and the fact that it is used in the PS3, and Sony's own Blu-Ray players, giving it a both movie playing capability and a gaming capability standard.