It's a shame, first of all, that there even has to be competing DVD formats; it'll be like Beta/VHS in the early 80's.
I think, though, that Blu-Ray will win out. First of all, it has more storage capacity than HD-DVD. Secondly, as far as I recall, HD-DVD only has a few movie studios lined up, while Blu-Ray has several consumer electronics and computer manufacturers, such as HP, Sony, and Apple. Sony even plans to make the PS3 compatible only with Blu-Ray discs. I think that right there is a pretty big leverage towards getting Blu-Ray into the marketplace.
Of course, HD-DVD is a bit cheaper, and price often wins out over technological superiority--see the results of the Beta/VHS war for evidence.
There's a
petition for combo drives circulating, though.