I would say that Microsoft's initiative here is pretty acceptable.. if only it wasn't overly ridiculous to start with.
Let's see: they have Windows 7 coded, the ability to change wallpapers present since at least Windows 3.1, and almost every netbook on the market has Windows XP Home Edition, which is fully functional.
Now people who buy a netbook with Windows 7 starter edition will have to pay slightly more for it and have something with less functionality ?
Let's see something here: for at least another year, a netbook will be able to run just fine with something like XP: the mobile Atoms can't handle 64-bit code, the RAM limitations don't favour it either, and you simply don't need it yet for the kind of things you do with a netbook. So for the next year or more, Windows 7 SE will bring the netbook price slightly up while offering less. I've heard even a Win 7 SE license will be slightly more expensive than XP Home, but even if it's the same, the argument still stands. This is ridiculous.
Microsoft has been listening to its customers as of late: they backpedaled on the UAC problems, on the 3 app limit, and I bet this is the last one. I don't know if it will fall, but it's ridiculous if it doesn't. Like other readers said, I've got an old 2006 Nokia 6070, which was almost entry level then and I can change the ringtones, the wallpaper and such.
Microsoft seems to have a very hard time at learning from it's mistakes. Windows Vista wasn't exactly perfect when it came out, but probably most people would have a slightly better idea of it if it wasn't outrageoulsy expensive. I mean, you look and say "I've got XP, it works; Vista is out and it has driver, compatibility and performance problems, and on top of that it's bloody expensive. Conclusion: I'm not switching."
And if you look at it closer you see this wallpaper thing is so artificial, it's just another means for Microsoft to continue robbing people because they can. Sure, you can have linux, but they know people get confused with linux and they take advantage of that while they can. It's the market working, sure. It's legal, sure, every company charges what they want for their product, sure. But it's not loyal to it's customers and it's not ethical.
I mean, Microsoft had to go to the trouble to add a few lines of code to verify the hash of the picture file in order to stop people from changing it. This is ridiculous.