Bought the 360 and the add-on last night.
King Kong looked way better than anything on hd cable (many of the scenes were 3D-ish).
Player worked great, love the menu, and load times were fast.
However, King Kong is a boring movie, as are many of the released movies (Phantom, Last Samurai, Vendetta, etc). So, I found myself skipping to certain scenes. I looked at the release schedule for HD-DVDs (and BluRay) and I wasn't excited. It's like 5 or so movies a month and I just can't get excited about a boring movie like Superman Returns or World Trade Center or whatever.
So, although the PQ was fantastic, the content is just not really there. So I just don't feel like I'm getting bang for the buck (one mediocre (plotwise) movie a week just doesn't do it for me).
As for the 360, I rented a couple of highly rated games, they looked good on my 50 inch 1080i display, but I got bored quickly and think the graphics are just overhyped. I like the graphics, quality, depth, and immersion of PC games much more.
So, for $600, I'm going to put my money towards something that will have more utility. Even my gf, who works in the tv industry, got bored after a few minutes of Kong and decided to vacuum the living room instead.
The experience reminded me of when I got into DVD-A/SACD a few years ago. Great quality but little content or demand.