I personally believe that Blu Ray is an incredible piece of technology. It can hold more than DVDs and shows image quality superior to DVDs.
However, I also believe that it will be quite a while yet until the DVD is considered 100% obsolete. I love my DVD collection, and I don't really have a desire to replace my current DVDs with Blu Ray versions. That would feel kind of like swapping one film for the same one with a bigger price tag.
DVDs still deliver a superior cinematic experience than video tapes, and you can use them on a PC and take them with you and play it on your laptop.
Blu Ray is definately the future, but it will be a while before DVDs will disappear due to a) being cheaper, b) Blu Ray players are expensive and c) some people don't even know that Blu Rays are (seriously, I asked a middle aged woman I worked with and she had no clue what it was).