i think hd-dvd is definitely the more complete format right now. if you count just the raw properties of the format (specs, studio support, hardware capabilities, etc), blu-ray is without a doubt the superior format. but if you count the implementation in the consideration (quality of available movies, whether discs use features availabile, level of functionality in the player, performance of players, cost), i think hd-dvd takes the ticket for now.
while it is indeed technically inferior to blu-ray, hd-dvd has been much, much, much more consistent. when you buy an hd-dvd, you know you're getting vc-1 video and dd+ audio. right off the bat, you're guaranteed next-gen codecs. that establishes a baseline minimum of quality right there. do some hd-dvds suck? yes. full metal jacket looks like ass. but that's a rarity. now, you might get a 30 gb disc or you might get a 15 gb disc. it might be encoded at 24 mbps or 16 mbps average. you might get the option of dolby true hd or you might not. but you always know, at the very least, you get vc-1 and dd+ at 1.5 mbps filling 15 gb.
now, let it be said that blu-ray using vc-1 or avc looks phenomenal, and that when you get your blu-ray, you'll probably have uncompressed 5.1 pcm or better, often dolby digital plus, true hd or dts hd/hd-master is included. that's true. but you also might be getting mpeg 2 and standard dolby digital. you might get that crammed onto a 25 gb disc and it'll look similar to broadcast hd. you might get it on a 50gb disc and it'll look virtually uncompressed. you never know. you might get java or you might not. your player might be able to make heads or tails of java, or it might not.
we've typically seen that where something is made available both on hd-dvd and blu-ray, they are either bit-for-bit identical (same size, codecs), or the hd-dvd is superior either because of better codecs (m:i III) or the presence of java-based special features not available on blu ray.
now, let me say that i fully expect hd-dvd to tank ultimately, probably in the next 18 months. but for now, blu-ray as a format has not been as comprehensively successfully implemented as hd-dvd. there's a world of potential for quality sound and audio -- and more often than not, it's realized, by some standard or another -- but right now, there's a very wide variation in quality. is it 25 or 50 gb? is it vc-1, avc or mpeg2? is it dts-hd? dts-hd master? dolby digital +? dolby true hd? 24/96 lpcm? 16/48 lpcm? straight-up dolby digital? there's a really high ceiling and a really low bottom, and the releases available run the gamut. in two years, when all this is sorted out and everybody is using either avc or vc-1 and either dts-master or dd true hd on each release, that won't be the case.
on the other hand, you do have the inherent limitations to the hd-dvd spec. in the event that a transfer uses the same codecs and is available on each format, and takes advantage of all the space available on each format, it should be better on blu-ray every time. add to that the fact that it seems that blu-ray players are in general of higher quality than toshiba's offerings (this includes the ps3), at least in terms of feature set and responsiveness, then yeah, it should be better to buy the blu-ray in that situation, especially since it seems that blu-ray is becoming more widely avaiable and less expensive. but that hasn't been the trend. so far, when titles have been made available on both formats, it has tended to be the case that either the hd-dvd is of superior quality due to better audio/video codecs (be it vc-1 versus mpeg 2 or dolby digital versus dolby true hd) or the hd-dvd has some special features (usually in-movie experience or something along those lines) not available on the blu-ray version. otherwise, they're typically bit-for-bit identical.