Most people associate windows with their pc, and not with a nice, user centric, portable, wicked, iphone-killer, wow!, consumable, look-at-this!, innovative product
and 7 give me the impression that it is just a follow up from windows mobile 6, like windows mobile 5, 6,.....7. And in the current time it's not like windows mobile gets so much chear that windows phone 7 will benefit from that association.
And third, if people ask you: what phone do you have? htc android, sony android, iphone, and then: 'windows phone seven'. It just doesn't sound catchy (imho)
So, that's my opinion on the product's name.
You can say, it's only a name, but names are important too, especially in a world were emotion is key thing in loving a product (all my friends who love their iphone can only give me emotion-like reasons why it is so good, they don't use it for killer apps)