DVD
Not that I'm biased for DVDs (since I work with them all day), but DVDs are far better overall than VHS.
Yes there are compatibility issues, and always will be without a true standard.
TIB, thanks for the cheap DVD player but here is my note on the subject "You get what you pay for." Typically the cheaper players have a lot of problems in the long run on playing DVDs. Too many customers email or call us about problems and most of the time it is because the player is a piece of crap! Also go with a known brand name, you'll thank yourself in the long run.
All players have quirks, for example "Atlantis" won't play on my RCA player without going through hoops.
I highly recommend visiting the website
www.dvddemystified.com for a good amount of FAQs. There are also a number of sites which reveal Easter Eggs.
TIB - I highly recommend finding someone who can help you program Easter Eggs on your DVDs. I think a tickling scene, or TIB doing the Macarena before a bound ticklee (just kidding) would be a riot for us fans to find!