As we predicted, you won't be able to upgrade existing Windows Mobile 6.5 devices to run Windows Phone 7 - because they don't meet the list of criteria. Natasha Kwan, General Manager for Microsoft’s Mobile Communications Business in the Asia-Pacific region, told the APC blog that "Because we have very specific requirements for Windows Phone 7 Series the current phones we have right now will not be upgradable”.
The main problem is that while the HTC HD2 has a capacitive screen, it doesn't have the four points of contact Microsoft is mandating for the new devices to make for a smooth experience; if it's relying on those for gestures and (utter speculation) multi-player games, upgrading older devices wouldn't give a good enough experience. And when we see the official spec later this month, there may be other differences (perhaps more built-in memory or specific graphics acceleration to make XNA and Silverlight look good?)
The HTC doesn't have the three standard buttons on the front either and the five it has don't correspond to the 'back', 'start' and 'search' buttons well enough (there's a different discussion to have about whether getting rid of the physical 'dial' and 'hang up' buttons is actually a good thing, but they're gone and you can't easily make 'home', 'start' and 'back' into 'back, 'start' and 'search' without confusing everyone). If this seems like nit-picking, get used to the fact that Windows Phone 7 Series devices aren't the 'anything goes' Windows Mobile you're used to and will be much closer to an iPhone -style experience where there's less to customise - and less to confuse.
There are unhappy reactions online to the news; cynically speaking given how low Windows Mobile marketshare has fallen (7% in western Europe compared to 4% for Android, 12% for BlackBerry, 18% for iPhone and 59% for Symbian as of November 2009) and the fact that Microsoft must be hoping for far more users for Windows Phone 7, this will make more new users happy than it upsets old fans. Some of that is down to unrealistic expectations - and some of those will have been raised by seeing Microsoft employees running the pre-production version of Windows Phone 7 on their own upgraded devices; that's no way to judge what the experience for actual end users will be. -Mary