HD components still cost the manufacturers a pretty penny. for tv sets, its still in the realm of $50-100, meaning a cost of $200+ for consumers. not sure how much it would be, individually, for a video game console, but im sure its a lot.
that said, less than 10% of the current video game playing market has an HDTV, with "experts" speculating it might crack 20% in the next 5 years.
an HDTV game played on a non-HDTV will look... like a regular game.
so if you don't have an hdtv, your 360 games wont look nearly as crisp or sharp as they do at the local gamestop or best buy. in fact, though the animation and polygonal attention to detail will be greatly amped by the next gen processors ... graphically, it may look like an xbox 1 game, as many of those were made for hidef, despite most users being unable to take advantage.