My parents got me an HD-DVD player for my 360 for my birthday and I gotta say, it's pretty good thus far. The picture and audio quality are unbelievable.
Well okay, the audio is about the same as DVD. My receiver is pretty old now so it probably doesn't support the latest and greatest audio codecs, but it still sounds amazing.
The video though is incredible. I mean, I saw the difference between SD and HD in games, but it's very noticeable in a movie as well. I watched King Kong and 300 in HD and the video quality is simply unbelievable. This is almost night and day difference between SD and HD.
I'm gonna start picking up on more HD-DVD movies and stuff. Also, HD-DVD movies has started coming in combo packs-- that is, the HD-DVD version of the movie is on one side of the disc, and the DVD version is on the other side. This is, in my opinion, a really smart move by the HD-DVD guys to push their format over blu-ray.
It's definitely worth checking out if you've got the audio/video equipment.