You got see this...touch optimized, of course you can also access the desktop mode for productivity purposes and file system access, but for media/entertainment/browsing...I think this is phenomenal.
I particularly like the tiles, as opposed to icons. Icons are puerile by comparison, IMHO. I think tiles are more informative and useful. I love windows phone 7 UI, this adds multi tasking and design in a very fluid way thanks to the power of the desktop. I can see users combining mouse and gestures in a day to day basis, it's just a matter of time (and apps).
More info here (Endgadget) and here (Anandtech).