With downloadable content, could you still get all of the same bonus freatures and extras? You know, like: commentary, simultaneous script to scene comparisons, multiple languages and subtitles, alternate angles, "live" special effects overlays/removals, etc.? Not to mention all of the extra features like bonus scenes, "making of" shorts and other similar things. We'll end up paying close to the same amount for a movie and getting much less in return. Also, there will most definitely be tons of copyright restrictions which will limit what you can do with the files. It's easier to rip a disk than it is to convert an already copyrighted file.
You'll probably be able to get them with a downloadable media type, but it'll be an additional micro-transaction. $2 for the deleted scenes, please. $1 for the directors commentary. $1 for each alternate ending. $3 for the behind the scenes featurette. Take a look at Guitar Hero and Gran Turismo 5 for some examples.
The added copyright protect of downloadable content also concerns me. You can buy a DVD/HDDVD/BD and take it to a friends place to watch it, or just plain loan it to them. Not so with downloads; they will almost certainly be linked to a single playback device, or at the very least an account system which will require online authorization like iTMS. No thanks.
I've been thinking more an more about this and I think that the real winner of the HD format war will be DVD. A single unified format could have knocked DVD out given some time. This market and consumer confusion, though, is going to make people stick with DVD longer rather than risk getting stuck in a "dead" format. For me the choice went a little like "$300 for an HD set top box, or $300 for a terabyte of HDDs to create a streaming on demand library of all my DVDs". I picked the HDDs. I'll snag an HDDVD add on for my 360 when I find one for <$100 or so (I'm hoping they will put them on sale this holiday season - they just price dropped them a bit, so an "official" sale could happen for Xmas).
For most people, though, who are buying their first HDTV sometime between 2007-2009 or so, I think it'll be "$300 HDDVD player, $400 BD player, or $100 upconverting DVD player" and the upconverting player will win out because they won't know which of the other two is "best".
One thing that I think could swing this whole thing towards the HDDVD camp is if Walmart lands a $99 HDDVD player soon and they market it right. By right, I mean they market it as an upscaling DVD player with true HD playback on "select titles". Sell it to people who are buying new, lower priced HDTVs as a way to enjoy all their exisiting movies in the best quality on their new set, while giving them some "future proofing" by playing HDDVDs as well. Basically, they need to make a trojan horse. It can even be a crappy HDDVD (720p max even, that's what most people are going to be buying anyways) player as long as the upscaling is good. People will buy it as a transitionary player and end up with a few HDDVDs and figure that's the way to go when they upgrade in a year or two.
On the other hand, if Sony does a better job with the PS3 that could be enough to move BD into the winners chair someday. Lower priced systems, some must have games, good bundles, etc. Could swing the market enough to really matter... but until then, I think DVD is going to be here for a long, long time... and I'm OK with that.