Having only seen the dvd version in its native Japanese with English subtitles, I was skeptic as to how much of a difference blu-ray would make to the picture quality.
Short answer: A LOT.
Long answer: The picture is phenomenal. As much of a pleasure Ponyo is to view on dvd, as are all of Miyazaki's other works, Ponyo on blu-ray is an incredible experience. The picture is sharp and there are a great deal many details in the blu-ray version of Ponyo that were missing or not as sharp in the dvd version due to the compression. The art is impeccable and there is charm in every character and environment. Unlike Miyazaki's previous works, Ponyo has a very childish look and feel to it, probably because (as Miyazaki says himself) the movie is aimed at 5 and 6 year olds, unlike his previous works. The environments are all beautifully rendered and looks great with the colored pencil feel. It looks excellent. And it looks even better on blu-ray.
The sound is lossless audio in English and in French, but I regret to say not in Japanese. This release would have been perfect if all the audio tracks included were perfect. However, I purchased this for the English audio so I feel that in itself is not reason to take off one star. However, it would have been stellar if all three audio tracks were lossless.
I won't go into any details about the story of the movie itself because other reviews have covered this to enough of an extent, but as someone who actually owns the blu-ray/dvd combo, here are my two cents on the product itself. If you have a blu-ray player, definitely purchase this version.