They really don't need to be touchscreen. It works equally with keyboard and mouse. Especially when used as a start screen. I just can't agree with your assumptions. There's a full workin desktop with all the functionality, so was win7 bad design?
It works so well, in fact, that legions of sites like this have popped up:
http://macgateway.com/windows/unlock-windows-8/
explaining to users who are stuck on the welcome screen how to get past it.
That's pure brilliance, right there.