I think the whole Blu-Ray thing is a hype. Over a high quality state-of-the-art TV with top notch resolution and a good 5.1 sound system I can neither see, much less hear a relevant difference between DVD and Blu-Ray when I feed our double-compatible Blu-Ray player with either one. (To be fair: The salesman guy said as much to us when we got the TV and the Blu-Ray player. He even said that for obsessive audio buffs DVD is the better choice, most Blu-Ray players not being geared to audiophiles, but videophiles.)
Blu-ray IS HD. If you're watching a DVD in hi-def, it's being upconverted. Some players do it very well, but your salesman is full of shit. The amount of video information in a blu-ray is six TIMES that of a DVD's. blu-rays also generally have uncompressed PCM audio, the same as a CD but sampled at 48 kHz instead of a CD's 44.1kHz. Unless you are talking about DVD Audio discs, which are pure audio with no video at all, EVERY DVD has mp3 audio. Most just call it Dolby Digital, but that's what it is: a lossy audio compression format with spacial assignment cues for multichannel speakers. Videophile blu-ray players often use audio as their major selling point since they can play all the weird high resolution audio formats, too.
When my mid-level Samsung player quit working for blu-rays the DAY its warranty expired and I replaced it with a nice Oppo a few years back, the FIRST thing I noticed was how much better the audio sounded on the better player, which was only 70% higher in price than the one it replaced and came with a ten year warranty. In "ophile" circles, that's chump change. CD's sound way better with it too. I have multiple disc players connected to the TV/receiver and before the Oppo, I could tell the difference in audio between them, but just barely. The video differences were more pronounced. My wife's DVR/DVD Recorder with analog inputs (try finding one of THOSE now) gives everything a light blue sheen and has slightly distorted audio, but when I switch between players now, all through the same Pioneer receiver I got on clearance at Best Buy a decade ago, the Oppo is like hearing a studio playback verses hearing something on a car stereo for the others. The dynamics are more distinct, the noise floor is lower, and the stereo image is far more pronounced.
There is even a model of Oppo blu-ray players that has XLR balanced stereo outputs for high resolution audio format playback. JUST for that feature, the price triples because they know audiophiles will pay it. In Oppo's defense, the upgraded version uses a completely different set of audio convertors and is of course connected to a discrete, class A output section to boost the level up to +4dBu, but to triple the price and offer that as a major alternative? There HAS to be a market to support something like that, and it does.
All I notice is - and it drives me nuts - that ever since we have this high resolution TV every goddam interior scene even in the most expensive movies looks disturbingly like a studio-filmed scene in your cheapest daily soap. Of course, it might have all been studio scenes before, but I never noticed! Too much detail can take away the illusion.
That's probably your TV. Where most new HD TV's have the ability to resolve a picture at faster than video frame rate (around 30fps, 30Hz, depending on where you are, it varies a bit) their onboard computer interpolates the image and actually creates the "in between" video that is being generated BY the TV itself in between the frames of video being fed to it. that's why you see all these TV's with low midrange frequencies being advertised as features (engineer joke); if you'll notice, they're ALL some multiple of 30 Hz. It's similar to oversampling in older CD players, but it works differently. There are generally a set of adjustments for this in the TV's settings menu and when the "smooth motion" feature (or some variation of that term) is turned too high, it makes everything look like a soap opera. Just go into your TV's menu and turn it down and it will fix the problem.
BTW, if you want to know just how hardcore I am with video, I have a LASERDISC player connected too. It also plays DVD's and CD's. What was the attraction of a laserdisc player in the days of DVD you ask? Laserdiscs have the same video resolution as DVD's but don't use the .mpeg compression for either video OR audio, and their audio is sampled at 44 or 40kHz (depends on the who made it); all players support both. The Laserdisc was the original blu-ray.