A friend of mine has switched to Elementary OS and claims it's the best Linux desktop he's ever used. Debian / Ubuntu based but with a lot more focus on the user interface and making it both pretty and useful. http://elementaryos.org/
Is it time for Canonical to lose the Desktop Linux battle? Perhaps, as they seem to be diverging more and more from what the average Linux user want's to see. Unfortunately they seem to have missed that no matter how much you try to dumb down Linux for my Grandmother, 99% of Linux users are still going to be geeks, or have an install that is set up by a geek.
Maybe with Valve moving more towards Linux with SteamOS and porting their game platforms to Linux, and with Electronic Arts and Dice occasionally wanting to mention the word Linux so they don't feel left out, you'll see more mainstream adoption. I imagine we will go through something similar to Android - different vendors may try to push their own "versions" of Linux branded for them, just like Valve is doing with SteamOS.
To those who say that the year of Linux is here already due to Android, you are 100% correct. The computers of next year are NOT going to be the same as what you bought 5 years ago. The operating system wars are over and open-source has won, although not in the way geeks like me were predicting ten years ago. Microsoft has officially lost their dominance on the consumer market and probably don't even realize it yet. It may take a few years before they lose the business desktop, but they have already been shut out of the average user's life. Phones, tablets, netbooks and smart TV's are how most people are consuming information and entertainment these days if not through a game console.
To me the most important aspect is that software is more and more becoming open-source building blocks that get snapped together with a bit of proprietary sauce sprinkled on. This is the vision I've had for software for over five years. Why re-invent the wheel every time you need to do something and instead continue to build new, cool and useful things on top of the work already done. With Linux's architecture of so many different projects that make up the complete operating system (with Linux really just being the kernel that glues it all together) you get to write less code and do more. Linksys figured it out years ago when they started shipping home routers with Linux embedded in them. This concept is finally moving beyond the embedded devices domain and into the full user experience.