I'd question the "sucking at security" bit. Not that Microsoft doesn't have security flaws, but it's not alone. Another point is that "it only takes one unpatched flaw to compromise a system". We'll find more flaws in Windows, as we will in all other systems.
I'd take a "wait and see" approach with Vista. I think it will be great, and not readily adopted.
As to the "Do we really need windows", I think that will be a question people will start asking themselves. Firefox is a great example of that. Also, as more companies switch from Office to something else (say OO), people will start wanting to use that at home.
Shoot, my wife has a PC only because she uses a PC at work. She said she'd rather have a Mac, but wants to stay consistent with what she works with. Makes some sense to me.
Time will tell. But one thing I will predict, It will "not be the year of Linux on the Desktop". Every year someone says that, and it never happens.