There's actually a REALLY good perspective on this from Joe Wilcox (wow, eh Jonathan?!): http://www.microsoftmonitor.com/archives/003652.html

One thing about this--he says that it could be a good thing in that the Avalon and Indigo features would be released early--possibly next year.  But in the PressPass announcement, it mentions that Avalon and Indigo "will be made available for Microsoft® Windows XP and Windows Server 2003 in 2006."  So where's the benefit?  And if that's the case, where's the incentive, then, to upgrade to Longhorn?

What also concerns me is that the other major element of Longhorn--the fundamentals--seems to be affected as well.  Remember the demo Allchin showed of a Longhorn build playing several videos at once, while XP could not handle anywhere near the same load?  What's going to happen to the new driver model, the new audio subsystem, etc.?  According to what I've read, Longhorn will now share the same code base as Windows 2003 Server SP1....