Microsoft has done a tremendously good job with WP7. The UI is very pleasant and fluid, something rather contrasting with Google's Android 2.3 UI. Microsoft has done it right. Google set the right features but neglected the design details and the aesthetics of the whole platform.
This is really striking when you compare, for example, the WP7 Twitter app and the Android's version. Note the detail of the fonts and the beautiful transitions. They created an amazing experience.
Two random pictures of both OS's:
Windows Phone 7
But Google isn't sleeping over its success. A new design or aesthetics paradigm is showing up in their work. Take the example of the new look of Google Maps:
This is good! This very good! I think it's part of the new and whole transformation of Google's positioning as a company. You can take the example of the new Google Plus. It's not just a shift in design; it's probably a core change in the way they will approach their product development.