I went for it in a major way, to be fair.
Back in 2008, I picked up a PS3, a new hi def 37" flat screen tv and a 5.1 sound system.
These things are nowhere near as expensive as you think they are. None of my systems are what you would call state of the art, or particularly expensive, but I am extremely happy with the results I get.
I don't propose that you should go out and buy all your movies all over again. Some movies (dramas, comedies, older films etc) don't really benefit from the upgrade.
But for newer movies, especially those that benefit from good pic and sound, the results can be startling.
For example...Sherlock Holmes. That really rocks on blu ray. It has a very, very active DTS surround track, and a pin-sharp picture to go with it.
And there are certainly bargains to be had...a lot of major stores are doing offers on blu ray's and movie box sets...best I have come across so far in Band of Brothers for less than 20 quid...I paid nearly twice that for the dvd when it first came out! And it is stunning on blu ray...bullets and bombs whizzing around your living room, and incredible picture detail.
And please do make sure you pick up a few DVD mags and keep your ear to the ground as to what is being released, and what the general opinon on quality...especially on older movies. Sometimes they are barely restored or remastered for blu ray at all, and you should keep your money in your pocket.
But then there are restorations that will blow your socks off, such as Zulu, Blade Runner and Gone With The Wind.
Finally...PS3 is a pretty good option, certainly if you are a gamer like me. Had it nearly 4 years and it's always been very reliable, never had a problem.