I have no dog in this fight, yet. Blue-ray currently has greater storage capacity than HD DVD, although that may be changing (see wikipedia posts below). Looks like audio formats for movies on disk are being held back by studio decisions rather than technology at this point. Perhaps when standard DVDs are in decline, studios will be motivated to increase audio specs for all movies on disk. From a video perspective - looks like full 1080p performance is more dependent on the choice of video processor and implementation of circuitry by the manufacturer than the format used (HD DVD vs Blue-ray).
Wikipedia discussion of HD DVD and Blue-ray:
http://en.wikipedia.org/wiki/HD_DVD#Origins_and_competition_from_Blu-ray_Disc
and
http://en.wikipedia.org/wiki/Blu-ray
For what its worth, the $99 Toshiba described in this thread is not a full 1080p player. Newer HD DVD and Blue-ray players are 1080p native, including PS3.
From Amazon.com:
Toshiba HD-D3 HD DVD Player
Technical Details
* HD Output: 720p/1080i - SD Upconversion with HDMI: 480p/720p/1080i
* Playback Media: HD DVD Video, DVD Video, DVD VR, DVD-R (Video), DVD-R DL (Video), DVD-RW (Video/VR CPRM), CD, CD-R/-RW (CD-DA)
* OSD Language: English/French/Spanish/Others - Advanced Navigation