People who want to continue using the mouse will continue using W7 for the next 10 years, like they did with XP before.
Asuming that the number of notebook style PCs continues to rise, your fingers, when on the keyboard are actually pretty close to the screen, often closer than they are to the mouse. So you would just move your have foreward some 10 or 20 cm and every once in a while.
To touch on a cell in Excel or mark a couple of words in a text processor. Maybe use two fingers when in Photoshop or AutoCAD. Well, for the later maybe a mouse is necessary, but that's what W7 will be around for for quite a while.
The mouse is a nightmare: First you have to find it on your desk or whereever you happen to work. Then, you have to focus on the screen and try to find that tiny little arrow. Finally, you have to coordinate movement of the mouse and arrow to click somewhere.
We are very used to it now, but it's a nightmare anyhow.
I don't even start about the trackpad!
How much easier to just stick your finger out, you don't even need to divert your eye's attention from the screen. Its natural. It fast. And your and fall instantly back onto the keyboard.
Anyway, point & click scenarios can be argued. Click and drag scenarios are where touchscreens fail entirely in their current implementations. At least on my tablet, it requires me to long press, drag, long press again, and press copy. Minimum of 5 seconds with some practice to copy some text. With a mouse and a left hand on my home keys, I can copy text in under a second.
I don't need to take the eyes of the screen, but maybe I am not the everage user. If you take a look at how less tech oriented people use a PC, a touch interface would definitely be a plus, though. Its like stylus against finger.
In addition to that, using your finger is not nearly as accurate as that "tiny little arrow" (which is of adequate size), and it obstructs your view of what you're pointing at. Touch screens are only good for big, bulky, simple UI.
1. Keeping any one finger extended while keeping the rest off the screen is none to pleasant for me, whereas mice are pretty comfy to rest the hand on.
2. Being a female with somewhat longer nails, I find using touch pads and touch screens to be a nightmare in terms of accuracy. I know exactly where my mouse is and what it's going to activate when I click - I can't say the same for my finger nail getting in the way or the larger area of finger-pad that touches as a result of avoiding nail contact. I suppose this could be remedied with a stylus of some sort, but I'm also sad when my hand is in the way of viewing stuff around what I'm trying to manipulate. I've got some pretty slender hands, but this still leads to awkward wrist action trying to keep a finger on the screen and look at everything around it simultaneously.
3. The distance I cover with my mouse on the desk in order to move my pointer across three monitors is a fraction of the actual distance travelled by my pointer, so instead of sweeping my arm dramatically across a meter or so, I've flicked my wrist a few cm to achieve the same effect. But, when I move my mouse very slowly, I can still achieve pixel accuracy.
4. Unless screens develop the ability to change their texture and structure, there is just no screen substitute for the little grooves between the keys, home row extrusions, and physical feedback of my keyboard. I can rest my hands on the keyboard without worry because it takes a certain amount of pressure to activate the keys, and I know for certain when I have pushed a key, even if there is no immediate visual feedback. I can always look down to my keyboard and it reveals a good deal of it's functionality to me. It also never takes up any precious screen real estate and I don't have to do anything elaborate to bring it up.
5. Goodness, can you imagine how dirty my screens would get, so fast! Yuck. Finger prints and smudges everywhere. But this is just my opinion and may be subject to change if better technologies come around. Presently I'm in no hurry to abandon my mouse & keyboard.
-edit for formatting.