I was watching Discovery Channel a month or so ago (yes, Discovery Channel is the source of half my knowledge ) and they were talking about going beyond HD tv. Apparently there is a film studio in Japan that has developed Super High Definition. Wait, even better, I'll link the video for you. Click here then click Japan Week -> Thursday -> "High Definition and Then Some"
Anyways, as home entertainment systems get bigger and bigger, more resolution is demanded, and this entails more storage space. After a while, DVDs may not have the necessary storage capacity as we keep striving to improve our viewing experience. Blu-ray disks give opportunities for these new technologies to be viable, and leave room for more improvements. Our standards keep going up, and our perceptions of what is 'normal' for video and sound quality in movies and tv keeps changing. Maybe we don't need blu-ray disks to meet our current standards, but I guarantee we will in the future.