Looks like the Nokia partnership may be their last best hope. Android can have the crapware-laden low-end of the Smartphone market and Microsoft and Apple can be seen as the quality brands, and if Nokia sells enough phones it will at least save MS's reputation.
Keep in mind though, Google has both the crapware-laden low-end, as well as some very desirable phones in the Nexus Line. WP7 has neither, really. I'd like to like it, as I think it's awesome that MS is finally doing some real UI innovation, but none of the phones tickle my fancy enough for me to really give it a shot.
What are you looking for in a phone? MS doesn't give hardware manufactures a whole ton of room to differentiate, but in the room that they do give, it seems to be covered fairly well. Is it just an overall build quality thing?
I'm not going to lie, I simply don't like the look of any of the WP7 phones. Yes, I know it's shallow, but it's a pretty big first barrier to overcome. I've heard some people say they really like the Nokia phones, but none of them really do anything for me.
The Nokia partnership will never succeed until they can make the phones much cheaper. If they could get them under $100 without a contract they would sell millions. There is a massive untapped market for cheaper phones with apps.