I don't see it happening. As long as they are just an OS OEM to the hardware manufacturers it isn't going to get measurably better. And they are unlikely to go into the hardware market. The time lag they have in developing the software, getting it to the vendors for driver development and then getting it back for certification is just too long of a cycle, meaning that any features they try to add are always 6-9 months away. WinMo 7 has supposedly been "out" for the hardware manufacturers for a little while now, but it still isn't on any hardware platforms and won't be for a little while yet. They'll continue to improve the product, but it'll continue to struggle catching up in terms of features/functionality.

And I'm not all that excited by the iPhone either, though I will readily admit that I haven't used one.