Either format is fine. Both produce great picture. HD DVD is now getting into 1080P levels with their newer models at lower prices. Neither is ultimately cheaper than the other if you go spec for spec but the real question is what movies do you want to watch if you can't afford the dual format player?
HD DVD- Universal & Paramount exclusive
Blu ray- Sony(Columbia), Fox, Disney & Pixar exclusive
Warner Bros and New Line are neutral at the moment.
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Sony KDS-60A2000 (LCos 1080P)
Denon 4808CI
Bose Speakers
PS3
Toshiba HD A35
Blu-ray owned- 29
HD DVD owned- 7
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