PS3 will need some time to build up its software library. Once that console-selling title comes out, I think the PS3 will sell better. People buy video games consoles to play games, so when good games are out, naturally the consoles will sell. In addition, I think a price drop from Sony will also stimulate the sales. After all, the Playstation brand name is strong.
As far as HD-DVD VS. Blu-Ray, I think both formats are here to stay, for a little while at least. Even if a true successor to the DVD format must arise, I don't think the HD-DVD will stand much of a chance anyway judging by the support the Blu-Ray format is receiving.