XP system restore was a waste, not seeing a lot of home users wanting to use this feature.
Most home users aren't even aware of the system restore facility. They buy an OEM computer in the same way as they would buy a TV or microwave.

Personally, I have not had much joy with system restore. Fine if it is something you have done wrong and you want to go back, but the majority of my customers don't mess with their machines, so that usually isn't the case.

SR doesn't help much when it comes to malware infections either.

There does seem to be potential with this new development though, IF it lets you restore Windows to its original state BUT includes Service Packs and hotfixes.

It would be even better from my personal viewpoint, if MS also included their Office products in the deal.
Getting rid of all other applications shouldn't be that much of a hardship to home and small business users. It may even be a way of getting rid of malware?

There is something of a potential issue with the OEMs given Microsoft's current deals with them. THEY are responsible for OS support, so will tend to stick to their own recovery methods to reduce their support costs.

All in all, I don't see it as being much help to the average home user, although it could be very useful to the people who support them.