Is the jump from DVD-BluRay as big as the one from VHS-DVD? No, it isn't because the biggest gain with the former was the loss of tape degredation etc. However on a HDTV there is a noticable difference between the two. It looks sharper and more detailed whereas a standard DVD player looks a bit blocky in places. The blockyness is overcome when upscaling but the detail isn't added in.
Does Blu-Ray winning the format war mean that prices will now spiral without HDDVD to keep it competitive? No, not in my opinion. DVD is going to be a much tougher rival so prices will have to stay competitive in order to compete. Having all studios using the format means more films being released in the format and more discs being sold should drive down the cost of producing a disc and prices should start to fall.