randomizer :
Given that a base Windows 7 installation is around 7-8GB, I reckon it should include all that software, and the kitchen sink. Sadly, a base Windows installation doesn't actually contain that much useful software.
Actually, it's more, if you do a "common" and not minimal install
We installed Win7 Ultimate x64 on my friend's 30 GB (28 GB after shaking off base 2 and base 10 differences) SSD, and it took about 18-20 GB. After reducing pagefile (stupid Win7 assumed that since we have 8GB of RAM, pagefile should be of the same size) to 1GB and switching off hibernation (hiberfile.sys is 6GB) the install size got more... sane.
I understand you, but given Win7's ability to recognise all kinds of devices XP wouldn't dream of recognising, I assume that this space is mostly drivers... also, eye candy (though, Compiz delivers way more eye candy and takes barely any disk space) and other stuff (which? can't think of anything, lol).
I normally don't care whether an OS takes 2GB or 20GB as long as I have an internal drive which is bigger than 60GB, but in these particular cases like the one I've described it becomes annoying. Maybe MS should think of shrinking the install size for Win8. Won't getting rid of legacy code do it? I hope it will help.