You would have a really good point if all the different linux distros were intended for the same crowd of people, but they're not. A great many of them are meant for niche markets where there are few options. In the grand scheme of things people who are thinking of a transition to linux might have heard of 2-3 distros, which is a manageable number of choices. It's not like you're going to see many ordinary folk trying to choose between some embedded linux and Ubuntu. I do agree with you that it behooves the linux community to have a minimum of distros trying to go mainstream at any given time.
And besides, unlike different distros of linux which oftentimes come with very different goals and processes to create them, the different "versions" of Win 7 are really just different features users might be willing to give up to get a better price.
Really this is what's the most baffling to me. I feel like Microsoft makes a product and then proliferates multiple stripped-down versions of it, whereas it would be so much better for everybody if they just made one single well-rounded product or perhaps two (home and pro) and no more. Kudos to them for only marketing a couple of them but there are still way too many flavours. Is it really necessary to have a media centre version and a tablet pc version? Why not just have drivers or separate software for those things and keep the experience consistent?