I have been telling anyone that will listen to me that upscaling is the way to go. We have upscaling on our DVD Recorder/player and it is very good. Blue Ray will be a temporary blip on the radar unless prices for it drop to regular DVD prices.
Blu-Ray was the winner of the format war, so it's likely here to stay. A good indicator is that it's now widely stocked at Wal-Mart, Best Buy, etc. Blue diodes have fallen in price, so my guess is the manufacturers are recouping their initial losses a bit, and prices will start going down. But a full-functioning 2.0 player won't get to $100 any time soon, as that requires a certain amount of permanent storage, memory, multiple decoders and network connectivity.
I hedged my bets by getting a PS3, which is a great game machine and upsampling DVD player, so whatever format wins I still have the games and DVDs. It also happens to offer the best, most expandable (for free) Blu-Ray player on the market.
I haven’t bought a Blu-Ray player yet because my current dvd player also plays DVD-A discs and SACD discs which I don’t think Blu-Ray players play. Do they? I wonder if te new Toshiba player will? If I find a player that plays “everything”, I’ll buy one.