Both HD-DVD, and Blu Ray use blue lasers, dont know if they are at different wavelengths, but the lens/focus system is very different between the two systems.
Blu rays' first layer is just a few microns beneth the playing surface of the disk, while HD-DVD (like DVD and CD) are almost on the top of the disk, just beneth the laser.
Which is best.. well no difference really, blu ray's have been given some extra protection with a coating, and anyway the media layer on a CD for example is so close to the top surface, in early production it was actually burned/destroyed by the use of cheap ink!, and CD's are prone to damage from scratches on the label side, which can expose the disk to oxygen and thus starts disk rot.
So both are fairly durable media, which with carefull handling will last a long time. Ok, so what next, we cant really compare picture quality, sound quality etc, because both systems use exactly the same codecs now (Early blu ray had 1 codec missing, but thats been fixed up now). Both systems have the same list of mandatory audio formats. Which is great, who cares about DD+, and the other new formats. Good old DTS, which can be encoded up to 1500kbps (full CD datarate) is great quality. Id rather listen to a good DTS soundtrack through my Tag AV32R, than a DD+, or even TrueDolby through some sony/pioneer/panasonic (whatever cheap hardware I could afford). Even though my Tag can only play the older formats, (Although it can be upgraded to DTS24/96

) it would take a very expensive piece of kit to really 'improve' on the tag's sound.
Ok, so Durability, picture/sound quality all the same... although blu ray does have a higher datarate 54Mb/s V 36.55Mb/s, so in theory the blu ray could have a 'less compressed' video stream.
So, the only real difference between them is capacity. 25GB/layer on Blu Ray, and 15GB/layer on HDDVD. Blu Ray disks with 4 layers (all on 1 side!) have been made apparently, so thats 100GIG!, although 50, and 25 are more common. HDDVD is normally 1 or 2 layers, but a 3 layer disk has been done, so max capacity 100GB V 45GB. Thats quite a difference.
Personally as there is nothing to choose from in quality, I'd pick the format with the biggest storage capacity. And thats Blu Ray. Sure there is a price premium on blu ray, as it takes new factories to make the disks, but if it wins, and gets established, then blu ray/hddvd, will be around the same price. (And im sure they will be a rip off, so that hollywood can make even more profits)
It also seems to me that the Blu Ray consortium has more consumer electronics companies backing it than HD-DVD. If you want HD-DVD your pretty limited in choise. Toshiba/Toshiba/Toshiba, Xbox360, or if your lucky Sanyo
Blu Ray on the other hand, has Sony, Panasonic, Phillips, Pioneer, LG, and JVC all working on players and recorders.
Although im sure that both high end, and budget brands will be working on players for which ever system wins the format war, blu ray does have the backing of a lot of 'mainstream' consumer electronics firms.
Hollywood doesnt seem to care, with most of them looking to release on both formats, except disney who are(were?) sticking with Blu Ray.
Finally, JVC have made a disk in their labs which would be a great thing to see real world. A full dual layer Blu Ray (50gig), with another DVD layer as well. (dunno if they can do full DVD9 combo). So it wouldnt be out of the question to make BD's which play in a DVD player at standard quality, and then magically transform into HD when played in a BD player

. Unfortunatly this is just in JVC's labs atm.