It's a very pretty interface, but like everything Microsoft, it looks bloated and at minimum probably requires a system with gaming specs to operate. Also, they still have yet to recognize the concept of being all about the media. Other than that it's cool.
At the risk of repeating myself ;-)...
We use ASUS Eee Top touchscreen MD's with UI1 and they work brilliantly in situations like Kitchens or bedrooms where you are already in close proximitiy to the screen and the touch interface just works like a dream. Everyone we have installed them for totally loves them... after 1 minute of use they get it and are sold.
Now UI1 has none of the 'eye candy' that MCE 7 has... but it is fast and responsive and just works really well. Try it and you see what i mean... touch Videos...touch the cover art for a Movie... touch Play...touch the screen while the movie is playing and the on-screen video remote appears instantly...skip a chapter or whatever...then after a few secs your back in the movie full screen. This just blows people away and makes them just feel connected to the system in a way that a remote just cant.
I agree in a lounge or Home Theatre you are not going to walk 10 feet to touch your 60 inch plasma ;-)
But in smaller more intimate rooms the touch interface works really well and they also work well when used to remotely control the main screen in the room too.
All the best