The Linux desktop is dead. Not because Linux sucks, but because the desktop as an important arena for killer apps, is dead. All the killer apps of the latest 10 years have been web based; facebook, twitter, blogging, wikipedia, google mail, google maps, etherpad... The only usage of the desktop nowdays is as a boot loader for a web browser.
Linux, or free software in general, as a delivery platform for killer apps, however, is live and well. Google uses Linux. Wikipedia uses Linux, Facebook uses Linux.