Granted, there's a lot of variation in the quality of all that software, but Red Hat Linux 8.0 on 3 CDs probably has 20 times the functionality of a Windows OS on 1 CD. Bitching that you get so much more software is kinda silly, although I will agree that software selection in all the installers I've seen is far from perfect. If you're doing an inplace-upgrade, you should have all 3 CDs on hand. Downloading 3 and burning 2 as a matter of principle is simply retarded.
So yeah sure, some of the commercial Linux operating systems are getting fat, but YOU still control what goes in, and you can always choose a leaner distro (say Debian or Gentoo I believe), or even *BSD.
With Windows XP in particular, you get just as much disk space occupied (say 1.2 GB w/ the paging file), but with no control over the unwanted MSN tie-in crap and a lot less functionality overall. Furthermore, in almost all cases, bloat in Linux is just disk bloat. Whereas in Windows, it's more than disk bloat and can meaningfully impact overall system performance or pester the user until they sign up for .NET Passport.