Why do you think the iPhone is such a hit? It's basic functionality? or the fact that you can have a lot of fun on it?
The iPhone was initially a hit because it was the first smart phone that was really designed for the consumer (before that, the way I see it there were mostly business smartphones). It is a hit today because it is seen as the cool phone to have and it is very well marketed. The eyecandy provides only the finishing touch.
their desktops come so poorly packaged
People get what they pay for, and for a lot of people they pay a relatively small amount of money to a company that puts a large markup on the hardware in their PC so they end up with something cheap. Most higher end machines from the likes of Dell are pretty useable on the RAM front from what I see.
Most users are running W7 or Mac OS X
On the server this doesn't matter at all. Servers run mostly Linux, generally with no UI. Or Windows Server - which runs with a UI not that much more advanced that what you might have found back with Windows 2000.
Lastly, I am glad to see smaller companies making a difference, like the one in the article.
I'm sure we all are - but I don't think that they are making the difference you think they are. A 512 core server set-up won't help any user make a home video, listen to their music or play games. What it will help is large datacenters who can serve more requests simultaneously.