You are right. Good story, good characters, good acting and good direction are the most important aspects of any movie. But please don't forget, movies are a VISUAL medium. Much of a films power comes from the visuals. The lighting, art direction and camera angles/movements can carry a great deal of story telling weight. Everything works together. Audiences expect quality visuals (and of course good sound).
It's true, you can't polish a turd and make it anything more than a turd, BUT a good film can be made GREAT by quality, well thought out visuals. That means using the tools and format (and DP) that best fit your story and exhibition plans. If your plans are just DVD and maybe TV distribution then DV can work and even look good sometimes. But unless you've made the next "Citizen Kane", don't expect a DV movie to make it to the theatre, it rarely happens.
The bottom line is this, (and I've been told this by distributors with whom we work) all things being equal, a good movie shot on film or HD is going to win out for distribution every time over anything shot on DV.
-Brad Hoover
