Yes, the only Windows Phone 8 feature that Microsoft has promised users of existing Windows Phone handsets is the new Start screen, with three sizes of tile you can arrange in a more creative layout. But that's not the only new features existing Windows Phone users are going to get.
Phone makers like Nokia can still make new applications for Windows Phone 7.8; Nokia is releasing a handful of interesting applications and system updates during June and July, including a group photo application that brings one of the signature features of BlackBerry 10 for the Lumia. Snap a couple of photos of a group of people and you can take the best faces from each shot and combine them. There are more apps and improvements to existing apps on the way; Nokia is going to carry on creating updates for Windows Phone 7.8.
Other developers are going to keep developing apps for Windows Phone 7.8 as well. Unless an app uses the new features in Windows Phone 8, it can run on both systems and developers will want to maximise sales; expect plenty of apps that have extra features for 8 but are available for 7.8 as well. Is that the fragmentation that Microsoft tried so hard to avoid in the past? Pretty much, but it's more like supporting two versions of iOS than 492 versions of Android; more work rather than so much work it may not be worth it.
The real question is, are there other parts of Windows Phone 8 that Microsoft could, should or will bring to Windows Phone 7.8? Given that we don't know most of the features, it's hard to say. But while anything that needs the new hardware or specific Windows features is out - NFC payments and tap to play and BitLocker and secure boot - others are possible.
Background navigation would work better on two cores but battery life aside, it should be possible to let turn-by-turn software carry on working in the background the way music playback can. VOIP software is certainly going to work on Windows Phone 7.8 and again, background execution could be possible; the hooks to make VOIP look like any other phone call probably rely on the Windows network stack that Windows Phone 8 gets with the kernel.
You couldn't have the full Wallet without NFC; it might be possible to have the section that stores details of membership cards but without BitLocker encryption you wouldn't want to store much more than your library card in there. You can have encryption on Windows Phone today; apps like Password Padlock use it, but the question with bringing all of these features to Windows Phone 7.8 has to be how much work it would be for Microsoft to recreate them on a platform that doesn't have the hardware or the existing Windows code they're being built on - and whether it's worth doing for a limited number of features and the current Windows Phone user base.
Microsoft isn't the only company to say that new features need new hardware. The iPhone 4 didn't get Siri; the iPhone 3 didn't get email encryption. A year after they were introduced, there were new iOS features you couldn't get on those iPhones. And the progression from Windows Phone 7.5 to 8 is far more like the difference between iOS 1 and 2 than it is between iOS 4 and 5 (it's been a while since the original iPhone got an update). It's a significant platform shift that will let Microsoft keep much more compatibility going forward.
You don't have to like the idea of not getting an upgrade to Windows Phone 8 to understand why it makes sense. But it doesn't mean that the Windows Phone you bought last week or last month stops working or stop getting any new features or new apps. If you wait six months there will always be new and better hardware - so you lose the benefit of having a new system for six months and at the end of it there's another shiny object for you to think it's worth waiting for.