Sony is using AVCHD compression. The downside is that there are no video applications that can deal with AVCHD at the moment - Sony's own Vegas video editor says AVCHD support availability is Spring, 2007.
Several manufacturers have indicated support, but no software or codecs, yet. This impacts current Sony hard drive based and DVD based high definition camcorders. This does not impact miniDV tape based high defintion camcorders.
Even Sony says they will not have BlueRay camcorders, but BlueRay DVD drives will be able to read AVCHD formatted video files... http://esupport.sony.com/US/perl/news-item.pl?mdl=HDRSR1&news_id=140
In the mean time, this might help, too: http://en.wikipedia.org/wiki/AVCHD
Has anyone heard when we will see Blu-ray Camcorders hit the scene ?