Prices will drop, features will increase, just not instantly. But surely the move to Blu will be strong in the second half of the year.
I'd also speculate that later this year we will likely see the need for firmware updates decrease. That will help the move to the mainstream. As the utilization of 1.1 features and chipsets become more familiar, fewer mistakes and omissions should be made- which drives the updates. And if more profile 2 ("live") features are developed as BD-J becomes more robust, the firmware updates that might arise could be almost invisible since you'd be connected to the internet already. The system would see you need an update for the new feature, and would automatically get it.
I'm not a big believer in the need for 2.0 for the masses. Most people will likely never connect their BD player to the internet, even if they have a profile 2 machine. How many HD DVD players ever did? I want it for updates, might even try some "live" features. But I think most people won't bother.
We'll see. Things should be much clearer on the advance of Blu-ray into the market by year's end.