VHS -> DVD -> BluRay -> H264 HD Downloads
For action movies, there is no comparison, BluRay is stunning and makes DVD look soft and murky - its not just the resolution, but the compression too, but romantic comedies are just as stomach churning on both formats.
I've been using a NetFlix like service (postal service) to get all my BluRay's - I've vowed never to buy another movie, in any format, after doing the VHS -> DVD rebuy, and not fancying doing it again to BluRay - I just don't watch them often enough to justify a purchase at any price, so I have my massive list of titles I want to see online, and slowly work through them as they turn up in my letterbox.
I've also been using iTunes rentals for non action films, where the quality isn't as important, since upping my bandwidth such that iTunes rentals can start playing 30 seconds after purchase, I've found the convenience pretty compelling - the breadth of titles isn't there yet, but along with the postal service, I'm fairly covered. When Apple TV supports 1080p I'll buy one, for now I'm using a computer.
And, because I'm not making any investment in any format (by only ever renting movies) I don't care if it changes again. I think in time it will go download, but even HD downloads are nothing on BluRay right now, BluRays are very very good, if you have the right kit to enjoy them, those opening city vistas are breathtaking.
I do feel sorry for Tosh though, they played by all the rules and still lost, the whole format debacle was painful for consumers too, I think there is a good chance legal HD download will become viable before BluRay hits critical consumer mass (iTunes, XBox, PS3, NetFlix STB etc.), and BluRay is destined to be another LaserDisc, despite 'winning'.