I think design is not the number one issue of desktop Linux. Windows is very ugly and it still dominates desktop computing, by the way KDE looks and feels amazing. The first problem desktop Linux has to overcome is the lack of support from computer manufacturers. Most people are not gonna go out of their way to find a computer with Linux. Another very important issue is that Windows compatibility is unavoidable. Even OS X which has an even bigger share of the desktop market than Linux can't fully replace Windows. Most people are gonna need Windows software sooner or later. Linux has to sell itself as a better alternative to Windows, not as an affordable alternative to Windows, people might end up having to spend more money by using Linux.

P.S. I still think self contained applications like in OS X & Windows are way better than the Linux model. Other than that and hardware support, UNIX-like systems are superior to Windows in all aspects. I can't live without a decent shell & decent support for dynamic languages.