Look, it's not that complicated. Microsoft is engaging in something known as "price discrimination". The word "discrimination" in this case isn't pejorative, it just means they would like to be able to charge every customer exactly what they are willing to pay. The feature differences between the versions of Vista are just their attempt to make the price differences seem reasonable.

This is the dream of the supplier. Offer your product at $69, and you miss extracting cash from people who are either more well-off, or want your product more - people who would have been willing to pay $100 or more for it. You also miss out on customers who would have bought at $68 or $67.

When companies try to engage in price discrimination directly, people get mad. Amazon got slammed for engaging in it. So companies offer slightly different varieties of a product at different price points, high-priced extras, and the like.

Steve Jobs likes to talk about how he launched the original iMac in a single color in order to give his organization "absolute focus". Microsoft's obviously not headed down that path. They'd probably be better served by more Apple-like discipline in the offering. But there is a reason, well-thought out or not, that they're doing this.