Personally I don't think it will, not outright anyway.
There are lots of WP7 fans out there who are eagerly awaiting a WP7 device from Nokia.
What I think will happen is they'll buy their WP7 Nokias and realise that they've just bought an iPhone in disguise when they realize they can't install anything unless they go through Ovistore (or whatever it's going to be called). They'll realize they can't rip CDs straight to the device unless they do so via Windows Media Player while connected to the web (so the DRM can be verified). They'll realize that anything other than M$ Thisthing and M$ Thathing will be crippled. Then those that do like to have a choice and don't like someone holding their hand while they use a bit of technology will realize they bought the wrong device.

But it could play out any way any how.