Nah, I personally didn't and still don't have a problem with regular DVD quality. For me, the upgrade is purely material so I guess it could be construed as a "keeping up with the neighbors" thing. I sort of view it as home improvement, as I said before it's been an investment as it makes sense with our lifestyle - a bit like upgrading a home theater system, getting a new computer, or even buying a better sofa. As a result we are a bit spoiled, so yeah...
For us, we already had a package deal through our cable company - phone, internet and cable are all in one. My parents have been using satellite television with HD for quite a while, we were impressed with the quality and the difference between a regular feed and HD is almost as vast as the difference between VHS and DVD. We still felt investing in HD television wasn't worth the investment (there's still really not a whole bunch of channels that offer HD) and even though we had an HD ready television for a while, we wanted to wait until we felt it was a good time to upgrade. Eventually there was a promotion with our cable company we use going on around the same time those Planet Earth series (which is an astounding series!!) were being aired for the first time. We thought we'd try it - it was only $14 more per month and the new package deal included a dvr box which we've certainly gotten more than enough use out of. The channels that offer HD get rinsed big time at my house. Even shows like Lost and Heroes - they do look and sound much better on HD than a standard cable feed.
stash got a bonus last year, and he's a big gamer geek and he'd been tossing the idea of getting either an XBox or PS3. As before, with our lifestyle, this too was an investment. We like to be entertained and we really don't have a ton of money so entertaining ourselves at home is the best way to go for us. I'm not a gamer geek, but HD gaming as Vorpal threw out there is quite sweet. The added bonus is the blu-ray and DVD upscaling. The difference between the DVD upscaling and regular DVD isn't terribly massive, but *is* noticeable... Difference between blu-ray and standard DVD are quite noticeable to me (maybe because I watch a lot of movies and have a good television).