Windows Vista Home works fine, though of course it's slow to startup, on a Sony Viao 1.5 GHz P4 w/512MB of RAM originally purchased in late 2002. The primary reason I fresh installed it on this PC was security for my sister's family and it's done the job, even when my nephew tried to let one of the fake AV/AS products install. Unfortunately, most of the general population doesn't really care about their own security until it's too late and they've already been infected and/or had their identity stolen.
Though Vista wasn't actually rushed, its release was badly delayed, so Microsoft decided to release at an intermediate point in its development which resulted in several problems. Though the performance issue was obvious, the larger issue was actually that vendors (Dell, HP, and many others) hadn't properly prepared for the driver changes required, especially as it related to kernel mode drivers. These could, and did, cause a new Dell Inspiron Laptop sold 6 months after the release of Vista to corrupt itself several times before I found all of the horribly out of date Roxio and other drivers that were causing the problem.
As for Windows 7, it was planned from the release of Vista that the next OS upgrade would be released about 2 years later to avoid another several year stretch without a new version. Of course this version would be largely based on the Vista core, which is actually good since there was never really anything wrong with it and the PC hardware vendors have had two years to bring their drivers up to date. It also gave Microsoft time to optimize the OS and allow it to work better on most older hardware, though by now there's even less of it around to worry about. In reality, every new version of any OS will always run better on newer hardware, since that's what it's designed to take advantage of. Vista was only a bit worse at this than previous versions, but the number of old PCs, often of not very good quality, had never been anywhere near as large in the past.
Over all Windows Vista was more of a PR nightmare than a real technical issue. A perfect example of this is UAC, which most have mis-understood from the beginning as a 'security feature'. In reality it's a 'nag box' intended to shame the software developer community into writing code that doesn't require Administrator priviledge for everyday operation, as already stated. If you are receiving lots of these pop-ups in everyday use, just get rid of the offending software and they'll go away, otherwise they should only occur when you are managing something that requires Administrator access. I totally agree with this process, since as all of you have stated, people are fundamentally lazy and just want the problems to be solved. This is what Microsoft is trying to get the software community to do, by using their own customers annoyance to get them to fix the bad coding. Unfortunately this seems to be the only way to get this through some developers heads.
Once the programs are working properly, the new default Standard user account will be usable by most, allowing the real improvement in security that this allows. I've been operating my sister's PC this way since it was bought in 2002, with Limited accounts on Windows XP before the current Vista Standard accounts. My nephew doesn't like it, but it's kept several viruses and worse from successfully attacking the PC and insured that my weekends spent there are only to perform upgrades of still badly written software like iTunes/QuickTime or Adobe products, all of which come originally from the Apple world by the way. The Vista, Office, OneCare AV and most other software is always automatically updated and has never been a problem during the entire life of the PC.
As usual Microsoft is right, it's just taking years for the developer and user communities to actually do what they've complained at Microsoft for several years about, provide real security in their products and actually use it. I've been doing this successfully since shortly after Windows 2000 released, I'm not really sure when the rest of the world is going to catch up.
All of this does actually result from the fact that early versions of Windows were designed without any real security, but these systems were used in standalone situations without any networking, let alone an Internet attachment.
Bitman