If it were me and had to pick one, I'd go with the HD-DVD upgrade. Reason being, if I would plan on using a sub with an 80hz XO (which I would) the Sierra upgrade would more than likely not be as dramatic as the switch from SD-DVD to HD-DVD. Maybe I am wrong, but I find it difficult to believe the Sierra's are that much better than the 340SE's run "small" and XO. I think the difference is more likely a slight one dependant on the source material
L/R - Sierra Towers
Center - Sierra Horizon Tower
Surrounds - 200SE
SW - Dual PSA XV15's
TV - Panasonic TC-P65VT60
A/V Receiver - Denon AVR-4311CI
Blu-ray/DVD - Sony BDP-S5100
DVR STB - Motorola Arris X1