I bought my first DVD player in 1999. It was a refurbished $70 DVD-ROM I put into a Frankensteined PC that had a TV-out. Watching DVD, MPG, AVI, DiVX, Real, and even QT fullscreen on the TV in my living room seems natural to me and I probably would never have bought a stand-alone DVD player at all if the price wasn't currently less than a Saturday night bar tab.
I don't own a CD player other than ones in my computers, either. My last car had one and I was once given a broken boom box that had a CD player, but those are the only CD players I've ever owned. Radio? Only if they stream it somewhere in the net.
So my computers run my home entertainment system and have for the last 5 years. I can't really imagine it any other way. I've rented movies from MovieLink a few times over the last couple years, the quality is good-great and the download speeds are typically 2.5+Mb/sec so the wait is next to nothing before I can start watching. (And the lack of late fee means it is okay for me to rent from them.) But would I ever buy an MP3 from iTunes or something? I doubt it. MP3s are fine as disposable copies of music but I'm not paying for that low-quality crap. $10 for a CD's worth of MP3? You have to be kidding. I'll get it for $7-14 at Manifest in full CD quality and rip it myself, thanks.
I don't have an HDTV. I might one day, eventually, maybe... If and when I do, I hope that Mark Cuban's vision of the future plays out. 30GB of uncompressed movie will be too much to download, renting and/or filling an external harddrive is a much better proposition to me. I don't think DVDs are going anywhere anytime soon, though, but only because nothing goes anywhere “soon” in the RIAA/MPAA world. “Soon” is a 4-letter word to those guys.