Welcome to dynamic technology. This will continue to happen until the end of the world as we know it.
My solution: I will wait to see which unit becomes most popular (HD-DVD or Bluray, or perhaps neither). IF HD-DVD or Blueray catch on, I will purchase whichever one is most popular when the price drops to around $300 or less. Then, I will only buy a very few select titles (maybe 3 or 4 of my absoulte most favorite movies). The rest will be rented from Netflix. I refuse to re-buy my entire movie collection again.
Until all of the above happens (not likely for at least another 2 or 3 years) I am not even going to concern myself with it all.
EDIT: If Sony history is any indicator, Blu-Ray (at least for movie playback) is going to crash and burn into a flaming pile of dog crap.
Beta -> Flop.
DAT -> Flop (yeah I know, Sony AND Philips were both responsible for this flop).
MD -> Flop.
UMD -> Flop.
SACD -> Flop.
Blu-Ray -> Vegas Odds should be leaning heavily in favor of this flopping.
Of corse Blu-Ray will probably do well in the Home Console arena since Playstation fan boys don't have a choice, but good luck convincing Joe Six-Pack and Soccer Mom into spending $1,000 for a stand alone Blu-Ray machine for movie playback!