Please disable the CD-ROM repository as Bashing-om said above (just to elaborate, by 'USC' he means- 'Ubuntu Software Center'), or by manually editing the "sources.list" file :
(just copy-paste and enter the following in a terminal)
add a '#' before each line that starts with "deb cdrom:", so that it looks like..
gksu gedit /etc/apt/sources.list
Proofread, save and close. Then retry updating, you won't get the error again.
By the way, for playing DVDs, you need some restricted codecs. An easier way is to just install VLC and use it for playing contents that require restricted codecs:
sudo apt-get update
sudo apt-get install vlc