Microsoft's biggest push here at CES 2009 is Windows 7 and I got to spend some time with the most recent beta version of the OS. Is it better than Vista? Yes. Is it better than OS X? No.
Don't get me wrong. Windows 7 is looking to be a great release for Microsoft with many improvements to the user-interface as well as the way files are organized. Microsoft is also thinking to the future and including full touch support for hardware manufacturers to take advantage of. The HP demo unit they had running touch used IR to track touch and wasn't anywhere near as accurate as a capacitor-based touchscreen, but it did support multi-touch.
As for your documents, Microsoft is actually going to one-up Apple in the way they are organizing things like pictures, music, and movies. Windows 7 will create virtual folders for different document types that don't require files to be moved to show up. Instead, you point the virtual folder to several different locations to check for documents. It takes the concept of music libraries and expands it to all files. Very smart.
The start menu is looking increasingly dockish and lets you pin applications to it much like OS X's bar. One difference is that applications can have specific documents pinned within an expanding menu. This means that the icon for Word can be clicked to open a menu that shows recent documents and pinned documents. This is another area where Windows 7 is innovating beyond Apple.
Unfortunately, Microsoft hasn't deemed Apple's Expose worthy enough to steal and they still aren't offering anything on that level as far as visualizing open applications. Vista's tabbing system makes a return, but Microsoft isn't really pushing that feature anymore. Instead, mousing over an icons picture in the new "dock" will show all of the windows within that application with a full live preview. If you then mouse over that window, it will be brought to the front and all of the other windows will disappear. It's no Expose, but it's definitely a step in the right direction.
It appears that Microsoft is finally getting into new ways of interacting with your windows. Dragging a window to the top of your screen will maximize it without having to navigate to a maximize button. Picking up a window and shaking it will minimize all other windows. Shaking again will bring the other windows back. Now, don't get me wrong, that's pretty great, but it doesn't really impress me as much as it would have before Apple's multi-touch trackpad on their new line of laptops. Swiping four fingers up the trackpad to see my desktop is much better than shaking a window. Still, it's good progress for Microsoft.
Applications like Windows Media Player have been made snappier and might finally replace my 3rd party programs, but it isn't likely. Besides, I need iTunes and its memory leaks to sync with my iPhone. It is nice that videos now load near instantaneously instead of the 2 seconds I'm used to in Vista. There's also some interesting improvements around playlists. After each playlist ends you'll get the option to play the previous playlist. This fixes the issue the old Media Player had with interrupted a music playlist if you went to watch a video.
Vista's UAC returns, but will have two additional levels of configuration. You can now set to Vista UAC levels (warn about everything), warn about system changes only, warn about application changes, and off. I'm still going with off as I'm smart enough to avoid getting virii and spyware.
Although I can't speak to this with my hands-on time at CES 2009, preliminary benchmarks from the beta version put performance well above Vista's, which is probably the biggest improvement if it holds true.
Overall, it seems like it's a giant leap to catch up to Apple's OS X, which is superior is almost every way... except for its ability to play games. Remember, this is based off of my time with this early beta version. This is a good thing, though. Competition is good and the more Microsoft innovates because of Apple, the more Apple will innovate in response. This leads to better products all around regardless of which platform you align yourself with.
I'm hoping to get more time with Windows 7 tomorrow as well as a look at the next version of Internet Explorer. Post your questions in the comments section and I'll do my best to get them answered tomorrow.