It's a huge deal. Cause Windows Phone OS is a brand new OS which is not backwards compatible with the older Windows Mobile 6.5 OS.
Now for the second time in 3 years Microsoft is saying there will be no upgrade path for Windows phone 7.5 users. Microsoft has currently less than 5% market share in the smartphone market. They have such a small base to began with and will alienate the early adopters.
I can't help but wonder if this isn't a big deal. My experience is that most people (i.e. my friends and family ) have no idea when a new software version is released or if they do they still don't update. They just go on their merry way and get a new phone when their contract is up.