They've created a new update, Windows Phone 7.8 that will rollout to current Nokia devices and other Windows Phone 7.5 devices.

It will include many of the new UX features, such as the new home page, etc.

But as WP8 is changed so much on a fundamental level, it makes no sense to port that to legacy hardware. They're reenvisioning the OS -- so the current Nokia phones won't support higher resolutions and multicore processors. That's ok! They don't have the hardware!

This is exactly what Apple does -- limited updates for legacy devices.

Only Microsoft was stupid enough to call it Windows 7.8 instead of Windows 8 (for legacy devices).

It's all in the branding and since they're bringing up the major features that legacy devices support, they should have just called it Windows 8. Consumers don't care about the distinction, if it looks like WP8, it's WP8.