The Microsoft project known as Windows 7 will be called Windows 7.

Mike Nash says: 

The decision to use the name Windows 7 is about simplicity. Over the years, we have taken different approaches to naming Windows.  We've used version numbers like Windows 3.11, or dates like Windows 98, or "aspirational" monikers like Windows XP or Windows Vista.  And since we do not ship new versions of Windows every year, using a date did not make sense.  Likewise, coming up with an all-new "aspirational" name does not do justice to what we are trying to achieve, which is to stay firmly rooted in our aspirations for Windows Vista, while evolving and refining the substantial investments in platform technology in Windows Vista into the next generation of Windows.

Simply put, this is the seventh release of Windows, so therefore "Windows 7" just makes sense.

This is a good thing. It will give the marketing department more time to consider the sense of returning to the 'XP' style lineup of versions, as in '7 Home', '7 Pro' and '7 Volume'.

The department may also want to consider suggesting to the 'Windows Live' team that the application formerly known as Windows Fax should appear in the 'Live' lineup and be available for download by ALL Windows users.