Minimum standards, yes. But look at those minimum standards compared to the iPhone or Galaxy SII. a 1ghz CPU? 256mb RAM? We're not exactly talking about speed demonds here.
However, the way that Windows Phone is archetectured, it's more like OS X than Windows 98. It's simply a fantastic OS, even on first gen hardware.
Give it a year, a legitimate marketing campaign with feature status, and have the OS on all sorts of hardware, and yes, it will catch up.
I thought the whole Apple mentality was that it's not specs that matter, it's the experience, and WP7 has a great experience (easily as smooth as iOS on lesser hardware). Anyway, Apollo is set to introduce super phones that can compete on specs.