Touch screen isn't the only input, of course W7 has all the normal options as well. Touch screen will be a situational interface, much like the Tablet PC and handwriting recognition capabilities have been been since XP (it's interesting to hear people say this copies Apple when the first Surface dual touch demosand Tablet PC "touchscreen" technology predates Apple by years). Having said that Apple have refined it into a slick UI and W7 should take that to the next level for mainstream devices.I read that touchscreen won't be the only option.
I dare say it'll be used in Kiosks, embedded W7/CE/Windows Mobile 7 for things like phones, control consoles, remote controls, point of sale and terminals, "surface" like home web browsing cheap sub laptops etc.