Title might be better as "Is Windows 7 finally convincing XP users that they're not upgrading to a version of Windows that doesn't suck?"
That's a fact. The speculative part here is Why. Is it that Windows 7 doesn't suck? For all we know, Microsoft could have a new ad campaign, or had bought a sales lead sheet made of gold.
Time will tell, but I predict this is not a permanent reversal in the longstanding trend.
It doesn't solve the lack of a good command line, unix development tools, or a package manager, but most users don't care about such things. They just want to surf the web without crashing or getting viruses.
If I only used my computer for an hour or two a day, say to listen to music and go on Facebook, then Windows 7 would surely be good enough. I doubt I would look for an alternative OS.
Am I going to switch back? No, but you're right that for most users win7 is just fine.