OLPC, EEE and similar efforts are really bring Linux closer to the mainstream. Anyway, most of the people do not need the functionality of Office 2007 and do not need the Aero interface of Vista.
XP+Office XP (or Windows 2k+Office 2k) will be good for most home and business users. And now main stream Linux+OpenOffice is actually good enough for most home users. For business user, depending on the field, it may or may not be possible to ditch Windows XP which is really a very good OS with SP2 installed. But I believe OpenOffice is actually good enough for majority of the business users.