Well, it still makes sense for people who don't need more than 3 gigs of ram. I'll use my dad as an example.
He is retired and lives in Arizona. He has been working with pc's his whole life, but now he just uses them at home. His needs are simple, he just needs a pc to surf, email, and pictures and video. Family photos and movies are most important to him. I have been trying to convince him that Win7 is the real deal, but he was extremely reluctant. No need to move from XP.
He came out for a visit, and I encouraged him to use my laptop to pick up his email and whatnot. By the 3rd day he was asking me about the RC, which I dl and burned for him. I think that is why win7 is going to be tremendously successful, people only have to try it for a short while to fall in love. He ABSOLUTELY did not want the 64bit version. He wants it to work with his old cameras and printers, etc.
For people like my dad, 32 bit is still needed and MS needs to provide that. Maybe by the next version of windows you could eliminate it, but I find that doubtful. More likely the NEXT version (Win9 lets call it for now). Then you could say lets move everyone from 32bit.
I have Win7 64 on my home pc and my laptop. I will never go back. My wife has Win7 32 and is almost as adamant as my dad about not migrating to 64.
I have struggled with XP 64 for about 6-7 months and I finally gave up and moved to Win7. XP64 simply is not being supported by software and hardware manufacturers, and its only gonna get worse, not better. I am finding win7 to be faster and more responsive, but I am certain some of that is the "new OS smell". Wait till I have 2 tons of cruft in 2 months!
Its too bad that home computers are not more like consoles, they left 32 bit far behind with the PS1. I don't think they even use 64bit any more, but I could be wrong about that.
I'm afraid we'll still have 32 bit for a little longer.