Can anyone tell?
I've done live sound engineering, and most people don't notice a nasty feedback-y howler, let alone the difference in quality between CD and 128 bit mp3. It's not that people are stupid, just that they don't care. They could however spot the difference between CD and tape, because tapes were nasty even before they got stretched and sounded horrible.
While I'm much less qualified to talk about pictures, I strongly suspect the same applies here. There's a massive difference between VHS and DVD. Is there a similar jump in quality between DVD and Blueray? HD is better, but is it enough that people who aren't looking can tell. Again I'd say the same with TVs. LCDs are now so much nicer than CRTs, and that's a huge jump in picture quality that most people probably assume is caused by HD - rather than just the fact they've upgraded the old telly.
My experience is pretty limited with HD content, but of the films I've watched the only one that stood out was Martin Scorsese's Rolling Stones live DVD 'Shine a LIght'. I've not seen it in normal definition, so I've no idea if what amazed me about the quality was just how much better it was than the usual run of the mill live music DVDs, or its HD superbness.
The manufacturers didn't help with their abuse of the term HD when trying to shift the early, crappy HD TVs that they were trying to dump on the market a few years back. And of course a downside of going for Blueray rather than HD-DVD is that it's just another thing to confuse consumers. HD-DVD does exactly what it says on the tin, Blueray means nothing to people.
Clearly there's a home theatre market, that will pay out thousands to have superb set up, but I'm not sure if that's going to go mainstream, because most people just don't care enough. I guess when Blueray is as cheap as DVD people will switch, but I doubt there'll be the same bonanza as when people dumped their VHS and rebought the same content on DVD. I guess people will just have Blueray players with DVD upscaling.