Blu-ray will win I reckon.
Sony doesn't want another betamax, so sticking a Blu-ray player in their next gen console will give them Playstation fans who will try out some Blu-Ray movie action keeping HD-DVD on the back foot. The PS3 losses Sony something like �150 for each one sold, but it�s still cheaper then most blu-ray players on the market now, so gamers will win the battle for Blu-Ray.
Unless HD-DVD prices crash it won't catch up.
IF it does catch up I reckon the PS3 will have shifted enough units to keep Blu-Ray going (like OMD), just. The current prevalence of DVD (and PS3s ability to play them) should mean it will be some time until you'd need to fork out for a new HD-DVD player.