WP 7 is an entirely different story and not what people talk about when they say Windows Phone. It was a reskinned Windows CE because they wanted to release a product and 8 wasn't done yet.
And it is not that the WP8 release fixed everything that was wrong. Rather, it added to developer churn by switching to yet another API, it upset users because no WP7 phone could be upgraded to WP8 (except for the HTC HD2 which originally came with WM6.1), and it still didn't support any modern mobile web browsers.
Then there was this strange limitation to only 720p screens and dual-core CPUs until WP8 GDR3. Or that you could not disable automatic screen rotation until that update. VPN support and the notification center came only with WP8.1.