Believe it or not, the improvement in quality is not THAT noticeable. Don't get me wrong, there are no longer any reasons to prevent people from slowly switching over. But, most people will find that it is not nearly as big of an upgrade as from, say, VHS to DVD.
Some critics have predicted that the market might even "skip" the blu-ray generation. They say that many people will adopt bluray, but it will never reach full adoption like DVD has. Then, when the generation after that comes out (probably either a holographic medium or an amazingly fast direct download system), everyone will embrace that, having in essence "skipped bluray"
In large part, the skip theory owes its likelihood to the fact that dvds are still compatible with bluray players, the media are the same size, etc. These compatibilities will all serve to make the bluray transition less noticable, and so there will be less total adoption.