I don't think I can agree with this. At the time when HD-DVD and Blu-Ray were competing, HD-DVD had a far superior feature advantage, and its only downside was the lower data held per layer (15GB vs. 25GB). That was somewhat remedied by the fact that it was possible to make triple layer HD-DVDs (45GB).
Blu-Ray's biggest fault in the beginning was the lack of restrictions on codecs. Some of the earlier transfers were encoded in MPEG2 (same as DVD), and they didn't look that great. HD-DVD required VC-1, which was considered a positive and negative as the quality is good, but it's a proprietary Microsoft codec. Although, VC-1 wouldn't save HD-DVD from what was simply a bad transfer (neither would h.264).
Blu-Ray did eventually catch up with a lot of its interactive features and other features that were added in subsequent revisions of the specification. Although, it did kind of alienate some users that couldn't upgrade their machines. Some people don't even like having to update just to play a movie. My mom doesn't keep her PS3 up to date, and I recall her complaining to me about
Back to the Future not working.
Just as a note, I owned both a Blu-Ray and a HD-DVD player during "the war".
I think the issue with the PSP would be the memory sticks not the UMDs. While UMDs were definitely different, I never had any qualms with them. The casing kept them fairly well kept.