I think your information is flawed, Windows 8 is not already out, it is a leaked pre-beta......
No, Microsoft do not want Windows 7 to have a lifecycle as long as Windows XP, they want to make money and also develop their software. Windows XP had an abnormally long lifecycle, as I said in my last post.
Windows 7 is not just Vista with eye candy, Vista had eye candy, that's complete rubbish, Windows 7 uses less memory, in fact, on my system Windows 7 uses the same amount of memory on fresh install as Windows XP did.
Windows XP is slower, after time the operating system slows down, the likelihood of a BSOD is higher in Windows XP, Windows 7 is rock solid never really slows down. In fact, due to superfetch Windows 7 should get faster over time.
I don't think HDD space matters to be honest, disk space is very cheap to buy, if you're building a computer for a client, you'd not be sticking an 80gb HDD in, more likely a 320gb or higher.
I think 80% of your clients want you to install Windows XP because they're computer novices, uneducated, some may have not heard of Windows 7, some may be scared of "change", Windows 7 is easily more usable than Windows XP.
It's fair play when people talk about Windows Vista vs XP and why they want to stick with XP, I went back and forth between those myself as settled with Windows XP until Windows 7 came out, but when that happened, I could find no logical reason to stick with Windows XP, it is understandable for companies, when they want to upgrade all of their computers they have to buy a volume license and the cost can be very high, some companies cannot afford this so it's their only choice to stick with Windows XP.