Nice to see all of the replies (and info). Like many others, we already have a ton of DVDs (although not in the ballpark of 1700 - wowza), so we won't be replacing all of those either. I've sort of been waiting for the "Star Wars on blu ray" announcement to make the switch as well, so we'll see (with LOTR coming later this year, and a possible extended version next year - that would make another one I'd like to "re buy"). Honestly, the new TV is much more important to us - but our DVD player is crapping out right now too, so we thought about looking at blu rays as well. We have $200 in gift cards to a local furniture place (Nebraska Furniture Mart, for anyone in the area), and thought we could use that for a blu ray player. We could put it towards a TV too, but they seem to be higher priced there than everywhere else (Target, WM, Best Buy, etc.)
As far as movies from now on, I don't know if we'd buy only blu rays either. I don't know if I'd care so much on certain comedies, etc. - but I'd spend the extra money for things like Star Wars, LOTR, Indy - or other sci-fi/superhero type stuff.