They do all the time even in XP as well, usually triggered by a resolution change. This includes logging in via remote desktop, or installing new video drivers that briefly dump the desktop down to VGA mode. That behavior was one big reason why I stopped relying on the desktop for file/icon storage beyond temporary files.

As for Windows 7, the overall press is indeed positive, since it did manage to be better then Vista, though thats not saying much. For me looking at it as a developer, it's still pretty crappy though, and worse then XP in a lot of cases. The only big benefit I see with Vista/7 is that it might finally start moving the Windows platform to 64 bit. Outside of that, UAC is still there mucking things up for programs with broken behavior. (To the point where a lot of programs are installing in the Users folder now to avoid the problems). Windows Side by Side is still there making DLL hell worse then it used to be. DirectX updates and MS C++ runtimes are still not distributed by Microsoft/Windows update, however Silverlight is.

The XP mode would have been really handy as a way for Microsoft to box up the past legacy crap and move forward cleanly. Problem is, it's only part of Professional and above, requires specific hardware support, and doesn't even ship on the DVD. It's really clear Microsoft's focus is not on the consumer market, but instead on the enterprise market where they get to charge a small fortune for a desktop system. (Windows client + Office + Windows server + Exchange licenses).