There are two new formats out there trying to replace DVD's. HD-DVD's and Blu-Rays. Both look and act pretty much like DVD's, but have higher quality picture and sound.
You need a player, the discs and an HDTV. Most people - even a lot of the gadget geeks - are sitting on the sidline and sticking with plain-old DVD's for now.
EDIT - Yes the PS3 player does use Blu-Ray discs to hold games, and will play Blu-Ray movies.