I have an N900, run GNU/Linux at both home and work and will probably by an HTC Android phone sooner than later. Nonetheless the UI on the Windows Phone 7 looks pretty lovely to me. I think MS has done a fine job.
The question these days of course is not what the phone can do OOTB, but what you can install on it later. AFAIK there isn't much of an 'app ecosystem' for the platform. They're also charging device manufacturers a license fee to ship with the OS, which isn't smart in a world rapidly flowing with Android phones. I wouldn't ring the death bell just yet though - it seems the market's changing pretty fast with the iPhone losing it's fashionable appeal here in the EU now that road-workers, plumbers and unemployed single fathers have the things.
Market differentiation allows for consumer individuation - something Apple's aesthetic homogeneity, doesn't offer. Think Similar (TM).