I don't understand the obsession with phone hardware. The screen I can understand somewhat, but to be fair, pixel density on phones is already extremely good both absolutely and relatively, and packing much more resolution into these small screens is getting extremely close (and sometimes surpassing) the PPI a human eye can even distinguish. (300 PPI is generally considered about the human limit, though not absolutely)
I honestly can barely imagine how I would use two cores on a phone though. I guess for some people it's different as they see a phone as a media consumption device; for me though, WP7 exemplifies what's important to me in a phone, get in/get done/get out.
I think as far as the expectations of the hardware go, people need to remember that how a typical Anand user looks at a phone is often not the same as a how average Joe does. I think the 710 and the 800 are very good market entrants, it gives WP7 something to sell to both the mainstream and the more advanced user. A 'superphone' is not going to get WP7 any marketshare because of cost barriers and people's unwillingness to splurge so heavily on something 'unknown'. But if the 710 can get out to the carriers and possibly drop to $99-$149 with a contract, it's going to be a pretty compelling package.