In the following image the Red area is in a 16x9 ratio, the yellow is 4x3. As you can see, people viewing widescreen movies in Full Screen are missing a significant amount of the picture. Like Gil said above, to adjust for this the person/s doing the transfer from film to electronic format has the ability to slide this 4x3 frame back and forth inside the widescreen area to capture most of the action. Many times though subtlety in the movie is lost. Pan and Scan introduces pans and cuts that were never intended by the director. Imagine two people having a conversation with one person at the left side of the frame, and the other at the right side. In order to show the person speaking, the 4x3 frame must slide back and forth or cut between the speakers. Not only is this dizzying watching all these unintentional cuts you also loose the reaction of the other person to what is said.
DVDs that are Enhanced have nothing to do with filling any size/ratio screen. All Enhanced DVDs do it to use another method to display the black bars above and below the picture thereby freeing the actual scan lines to create picture. In order to see the higher resolution of Enhanced DVDs you must have a television capable of taking advantage of Enhanced TVs. In the description you might see something like Squeeze or Compression I found the following descriptions on Best Buys site:
Sharp 4x3 television (Model: 32F641)
Vertical compression technology in 16:9 mode focuses available scan lines within the letterbox area, maximizing resolution for highly detailed images
Toshiba 4x3 Model: 32AF45
4:3 aspect ratio, with 16:9 widescreen mode with vertical compression
I believe this option is only available for 4x3 TVs and is getting hard to find.
If you're thinking about a new TV, go widescreen all the way. You will not regret it.
Good Luck