Blu-Ray doesn't intrinsically have lower quality picture or sound (in fact, the theoretical maximums and averages for both are higher on the Blu-Ray vs HD-DVD). Blu-Ray has higher capacity (50GB now, going up to 200GB? with six-layer).
Platter density is higher with Blu-Ray, period - thus at every configuration you look at (8cm/12cm, single or double sided, 1, 2, or 3 layered), Blu-Ray will always have the upper hand.