I thought Windows 7 was designed to be scalable enough to handle up to 64 cores?
The operating system is not the issue - the applications running on the operating system are the issue.
For example, most productivity applications (even the x64 ones, such as Office 2010 applications) are single-core - while the x64 applications commonly multithread, very few of the x32 applications (and don't even get me started on browser add-ons/plug-ins) do so. The same is true of most games - primarily because of legacy single-core P4s running Windows XP.
Sandy Bridge-E is aimed at that niche crowd for whom i7-2600K (the bang-for-buck champ among Intel CPUs today) isn't enough, but for whom a Xeon makes no sense. Basically, it's a niche CPU.
Lastly, from what's been seen out of BD so far, it's *barely* a threat to i3, and isn't one to i5 non-K, let alone i5-K or i7-K.