This is an excellent article describing what really happened to Longhorn / Vista's feature set, and a big reason for all the delays. Definitely worth the read.
Windows is broken and Microsoft has admitted it. In an unprecedented attempt to explain its Longhorn problems and how it abandoned its traditional way of working, the normally secretive software giant has given unparalleled access to The Wall Street Journal, even revealing how Vice President Jim Allchin, personally broke the bad news to Bill Gates.