I have to agree with you on the progression in Office - the feature set has been there since probably Office 97 for most of the apps, but 2003 for Outlook. While Office 2007 is a huge progression in UI (argument over backwards vs. forwards aside) it does not add much of anything functionally for me, with the exception perhaps being the mouse over menu popup and the context sensitive toolbars, which are significant as far as usability goes but don't necessarily add additional function.
However, I think you've got your head in the sand if you don't think Windows has progressed since XP SP1. The stability, security, and usability of the Windows platform especially with Windows 7 is far and away better than Windows XP, and with the shift to mobile in Windows 8, new opportunities abound for real business world application development that can translate to a mobile platform.
I don't think the rental model is going to work very well for Microsoft until the prices line up better with real world usage. Buyers are too cost concious these days to go for a pricing model that costs twice as much over the typical 3 years between office releases.