I agree with your observations, but not with you conclusions.
It's true that, especially for touch-screen capable devices, Windows 8 satisfies the casual user and less computer-savvy. The only reason these people find it usable is the ease of which one can launch a basic selection of apps from the Metro UI. It's like having a big program launcher / menu system bolted onto the front of everything.
The millennials are pretty fixated on "cloud based services and apps" right now. You could give them a modern day dumb terminal with good web surfing capabilities and all of the popular sites made into icons and they'd be happy. (Well, you might have to make it run MS Word and Excel too, since they typically learned those programs in school and don't like the web-based alternatives so much.)
Your suggestion of using Windows 7 instead and the response that it's "for old people" sounds like the dismissive behavior I'd get from our pre-teen kids... but doesn't mean the entire face of computing has changed.
People who actually want to do real work with a computer aren't exactly praising the Windows 8 UI as the future. Microsoft is trying really hard to sell it that way, but it's struggling. The whole Nokia merger and the in-fighting surrounding it indicates MS is a company desperate to find other revenue streams. Basically, it doesn't really believe in Windows 8 itself -- so it wants to bolster it by retaining some leverage in the mobile phone space.
I may be one of those geeks who "used to laugh at those who refused to adapt to change", but back then, the changes were truly innovative leaps forward. When you tried to get people using MS-DOS to move to a GUI environment that supported multi-tasking, automatic support for all of the RAM in the machine, cross-application support for printers and audio devices and SO much more, it was a leap worth taking. When I compare Windows 8 to Apple's approach with OS X for desktops and iOS for smaller devices, the Apple method makes a lot more sense to me. Win 8 isn't really giving me back anything that makes it worth re-learning where they hid all of the settings and options.