You bring up some good questions.

There is a lot of .NET / Windows Forms work going on within Microsoft. I can't speak to the teams I don't work on, but my team is in the process of writing a 99.99% NET WinForms smart client application that is due to ship midyear 2005. We can't make it 100% due to some legacy interop constraints.

I work in Microsoft Business Solutions and a number of products in that division are going through the .NET paces.

In my specific silo of Business Solutions, we have already shipped 2 Windows Forms applications and have one more in the design phase.

From my perspective (not MS hype), Windows Forms has provided my team a great productivity boost as well as a huge improvement in design / code quality over our legacy application (classic ASP, COM etc.).

I'm sure other teams have their reasons to not port to windows forms (legacy code size, development life cycle, longhorn / Whidbey sync etc.).