I just bought an HDTV about a month ago, my first one. I also got a blu-ray upscaling player. I haven't bought any BR disks yet, but I'm amazed at the quality of the upscales DVD's. Mine is currently set to upscale to 1080i because I havent had the time to figure out how to switch it to 720p but even like this it's so clear and life-like.
I have no plans to replace any of my DVD's with BR, but moving forward I'll be buying the BR version. I would expect over the next 4-5 years new releases will still be combo packs, but I think it will be all BR after 5 more years.