I haven't converted to Blu-ray yet. DVD is fine for me, but like going from vinyl to 8-track to cassette to CD, it's cheaper to wait until all the bugs are worked out and the prices come down.
I have a pretty nice setup. It's not surround, but a very powerful stereo amp and 2 sets of quality speakers. Watching a 3D concert on a Panasonic ZT 60 on a rainy afternoon is pretty relaxing.