I've used both XBL and Blu-Ray to watch HD movies about the same amount. It really just comes down to what is more convenient that day. If me and the woman are about to go out for awhile and want to watch a movie that night, I will queue up a download on XBL and it will be ready within a few hours when we get back.
 If we are just sitting around and want to head to the rental store to pick something out, including regular DVD's as an option, we always look through the Blu-Ray movies as well. It's super common that we come home with 2 regular DVD's and a Blu-Ray.
To try and slam EITHER option due to the features of the other is just stupid. Both are great, viable, and provide an excellent picture quality. 720p is almost as good as 1080p, and both are extremely better then standard def when watching on our 50" DLP. I have yet to fill up my 360 hard-drive, or even come close to it. I don't keep demos that long after playing them, which is pretty much the only content that competes for big chunk of the harddrive space. Content downloads are fairly small.
I am a little at odds with the blu-ray in the PS3. On one hand I think that it's awesome because of the extra space it provides for games, and I got a cheap blu-ray player to go with my 1080p TV. On the other hand I hate that Sony has forced 1080p through HDMI only (then they "forgot" to include an HDMI cable in the box), and that they have all kinds of copywrite protections written into the hardware along HDMI. I don't steal movies, and have no intention of doing so, so this seems like a bit of a slap in the face for having been a good citizen while others are out doing so. Blu-Ray movies will be stolen in the future anyways. Crackers have always gone ahead and done it whenever challenged. I fail to see why using HDMI is going to stop anything.
The only things movies studios should be involved with is making movies, and putting them on disks. Once they get their hands in deciding what hardware goes into personal electronics for our homes, we all get screwed somehow. They do not have out best interests in mind and will do anything to shank a buck our two here or there. Blu-ray just seems to have an aura of this mentality that makes me wish is would fail somehow.
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