I'm not going to go putting Linux on a customer's PC without asking them of course, and if they expect to run commercial applications, there's exactly have much of a choice. However, I would definitely consider putting it on my Grandma's computer. It's not like she knows how to use Windows, anyway, and I can very easily strip down the interface to make it basically do nothing but email, web, some cheesy games like solitaire, etc., and I pretty much don't have to worry about malware. It's actually pretty compelling in that usage scenario. Firefox + Thunderbird work quite well on Linux, as does Chrome, Opera, etc. You don't get Internet Explorer, but I consider that a positive

I use Linux because it's a very developer friendly environment (if you're developing anything except an application specifically targeting another OS), it's free, and it tends to work pretty well. I will say I'm quite pissed with Ubuntu at the moment, so I'll probably end up switching back to Debian. All my dev tools for my embedded stuff work great. Most are based on the GNU toolchain, anyway, so the Windows versions are actually somewhat second class citizens.
Basically, unless your goal is to run Windows applications, I'm not sure why Linux is such a laughable OS. Heck, even WINE is surprisingly good these days although still something of a pain to actually use. The MAME community has generally avoided Linux, though, so um, I guess that makes MAME a "Windows application" subject to, um, running better on Windows. Would you complain that MacOS X is so bad because it can't run all your MAME stuff like Windows does? The Linux desktop is a bit more primitive, I'll agree, but it's generally serviceable for casual use, and it makes an excellent server.
All my servers (aside from a Windows testbed) run Linux. I frequently have my uptime limited by power outages exceeding 2 hours that my UPS can't get me through. I've got Apache (HTTP server) including Phusion Passenger (Rails for Apache), postfix (SMTP server), dovecot (IMAP server), PostgreSQL (SQL database), BIND (DNS server), Samba (CIFS/Windows Networking), and some other random stuff like LLDP, DHCP, NAT routing, etc. on a little Atom box that's my "home" server. I'm using <1GB of RAM for all that, and it's surprisingly speedy for being on a lowly little Atom, and it was all free. It took a little effort to set all that up, but the OS install itself was a snap, and it just hums along requiring only occasional minor confirmation that I would indeed like to install a few security patches.
Also, saying that Android is Linux is, while technically true, a bit misleading. The kernel is indeed Linux, and that's technically all Linux is (a kernel). However, the kernel is quite modified, and the userspace is totally different from a typical UNIX-like Linux system. The GUI is also something Google came up with, rather than X11, though X11 is starting to show its age architecturally, so that was probably a decent choice on Google's part.