Sounds like a winner to me
Is seems that the plan is that a Home use version will be free - probably without extensive networking/active directory support/RAID etc, and the full version with all the bells and whistles will cost money. That's quite smart as it should build a user base of folks who are familiar with the operating system and who will then purchase Office365 services etc. And the features that cause the most problems and require the most support will be paid for by the people who use them.
Thus businesses get to hire people who can use computers, Microsoft has a recurring income stream from the cloud and they can retire the copy protection/registration side of the business - that will save a lot of money and problems too. It also neatly solves the problem of all those pirated copies of XP/Vista/Win 7 - this seems that Software as a Service is going to be a winner after all.