you guys do realise that this all harkens back to VHS vs Betamax.
game consoles to make use of the DVD format helped to bring it out of the slump and to popularise the tech, but in reality, the PC did too, out of sheer need of it. having a game on a single DVD makes more sense than having it on like 8 CD's (see Unreal Tourney 2004).
However, some devs still use CD's.
as far as i'm concerned, when playing video, a DVD is better than VHS, simply because the sound is digital and thus doesn't have a slight 'hiss' in the sound playback whenever you turn the volume up, visibly though, when it's clear, one doesn't really see all that difference in the quality on a standard definition TV.
with all this blue-ray/hd-dvd war, all i'm thinking of is the expanded capacity of the respective formats, for consoles, this could be a good thing, however since the PS3 is gonna be the ONLY console using the next generation of optical formats, i can't help but feel that they're not gonna create that much of a market for it. It's phenominally high price tag compared to other consoles is gonna scare off all but the most ardent (and rich) of Sony fans (they exist.... i think).
Either way, i'd hold out on looking for another format of optical disc until at least the next generation of consoles is being released, or the generation after that. Because then we'll see the real format battles begin.