There are a lot of myths perpetuated by fanatics for each format, and I like both for numerous reasons. Here is my take on the war, excluding the DRM issue, with research I've done on the topic.
HD DVD
Pros
• Most titles use VC-1 encoding.
• Players (not discs) are cheaper.
• Full interactivity support since launch (iHD interactivity layer, ethernet ports, etc).
Cons
• No Fox, Disney or Sony movie titles.
• Lower storage capacity per layer.
• Lack of PC/Mac burners.
• Lack of 1080p support on cheaper players.
• Popular titles that include both DVD/HD DVD on one disc are expensive.
Blu-ray
Pros
• Scratch resistant coating.
• Higher storage capacity per layer.
• Hardware support (PC/Mac burners available, PC industry support including Dell and Apple, electronics industry support including Pioneer, Phillips, Hitachi, Samsung, LG, etc).
Cons
• Most titles use BD-25 discs with MPEG-2 encoding.
• No Universal Studios movie titles.
• Lack of interactivity support at launch. (Launch players not mandated to support interactive layer, ethernet ports, etc.)
• Players are generally more expensive.
• Lack of PC/Mac BR-ROM (read only) drives.