I expect I will be getting a few e-mails saying something about "u sez u dnt lik linux, u suc", for stating this, but here goes: From the facts I have been seeing, Linux is definitely not taking over the world.
In the server arena the system seems to be doing well as a Web server or even an applications server in the small to mid-market, but when it comes to enterprise, we only see Linux here and there. Even in the mid-tier, I have heard many companies opting to move to either Microsoft or Unix (on the higher end) because of the problems experienced with skills and support. Put simply, Linux is too difficult to manage.
That is no reflection on the competence of the system. It is a reliable, cheap workhorse, but business today just wants IT to work. Nobody has the time to fight with technology any more - of course we are used to Microsoft's 'unique operating system features' so it is not really a fair comparison.
It seems as if Linux is being used successfully in niche areas or where it has a technically competent evangelist determined to keep it running. For the mainstream, companies are more likely to stick to what they know - a pity really.
And things are even worse on the desktop. Nobody in the mainstream cares that a drive is being mounted or unmounted or that drivers need recompiling. These are things that should be done by switching the machine on. Who cares what is underneath? There is still far too much of the 'search for a driver on Google or write it yourself' attitude.
The Linux desktop has come a long way, to be sure, but there is still a way to go before it can compare to Windows, never mind Apple - yes, I know Apple uses an open source core, the point is that Apple does stuff with it, all users see is a funky interface. I have heard the new release of the Novell desktop is an improvement, but we will wait and see.
The only way Linux will ever get a decent share of the mass market is when it is 'push button, start work' simple. And for that we need to remove some of the technical experts controlling Linux and put some marketing and business people in the prime seats.
And please, forget this 'free' business and the GNU licence rubbish. That works for techies or philosophers who have too much time on their hands. The rest of us need to do some work and meet deadlines.