There's still a very good reason to buy an HD DVD player: they make fantastic upscaling DVD players.
As for the 360 not being used as a high definition media player, well, about 3% of 360 owners have purchased the HD DVD add-on drive. Not a huge percentage, but still around half a million units or so.
However, enough people are using XBLVM to perk up ears over at Netflix. They're surveying customers to see if they would want to stream Netflix movies to the 360. This is something I'd personally love to see.