There isn't a huge difference between DVD and either HD formats. With DVD, you got significantly better picture that doesn't downgrade over time, chapter skipping, menus, special features and so on. Just so much more than VHS. With Blu-Ray/HD-DVD, you have better picture granted you have an HDTV. Maybe I won't need multiple discs for TV shows. That's just not enough for me to adopt a new format.
For games, DVD doesn't seem to be holding 360 back. Factor in better compression techniques and it becomes even less of an issue. To replace DVD, there needs to be a good enough reason to replace it. Right now, I don't see any.