http://www.anandtech.com/tradeshows/showdoc.aspx?i=2666&p=13
Blu-ray vs. DVD Image Quality
One thing we did get a good chance to see at the show was a number of live Blu-ray and HD-DVD demonstrations with real high-definition content, and honestly, we weren't all that impressed. Don't get us wrong, it looked good, just not breathtaking or anything like that.
The problem is that the jump from progressive scan DVD (480p) to Blu-ray and HD-DVD at 720p or 1080p just isn't that great, even on a 46" display. When viewed side by side with DVD content, the picture looks quite comparable, it's just that the Blu-ray/HD-DVD content is noticeably sharper (which makes sense since it is much higher resolution).
The other thing to keep in mind is that the move to HDTV from standard analog cable was so dramatic because of the very poor quality of most cable feeds. With Blu-ray/HD-DVD, the quality of DVD is already pretty high, so it's really tough to achieve the same wow-factor with just an increase in resolution and bitrate.
The larger your TV the more you will notice the difference and of course the quality and compression of the content itself is going to determine how different Blu-ray/HD-DVD look from present day DVD.
Pioneeractually had a display comparing Blu-ray and DVD with the exact same content that illustrated our point pretty well. The Blu-ray content on the left was playing back at 1080p, while the DVD content on the right was 480p upscaled to 1080p:
http://img488.imageshack.us/img488/9033/blurayvsdvd7as.jpg
http://img11.imageshack.us/img11/1605/blurayvsdvd21wa.jpg
Again, the image quality of the Blu-ray player/content was top notch and definitely sharper than what was outputted from the upscaling DVD player, but the impact wasn't absolutely mindblowing. You will obviously have to find out for yourself, but we just wanted to aid in setting your expectations for both Blu-ray and HD-DVD.