Can't say I'm shocked--Symbian S60 was ahead of its time back in 2003, and early on, its slow software progress was mitigated by class-leading hardware (for years, the best GSM cameraphones were Nokias--think N73, N90, N95, etc...). The Communicator line was like nothing else available, and had a loyal following that happily shelled out $700+ for the latest and greatest. I was a gigantic fan of Nokia's Symbian phones for a long time--the E90 Communicator is probably still the best phone I've ever had (untouchable build quality, an 800-pixel-wide display when VGA was the best you could get from anybody else, a nice autofocussing camera, the best hardware QWERTY in the business, and unlike many smartphones, fantastic call quality)--but round about 2008 or so, it seemed as though software progress stalled on Nokia's smartphones. Despite my dislike for many things about the iPhone, one place Apple deserves credit is for pushing major software updates for years on their phones, as opposed to a ship-and-forget mentality. Sadly, Nokia missed the boat on this a few years ago, and along with declining build quality, they didn't have much left to sell their product.
Yes, Nokia smartphones are everywhere in Europe etc--last time I was in Italy, you could get a free Symbian smartphone from almost every major carrier, and it wasn't uncommon to see high-end phones (the $500+ models), either. I've got little interest in WP7, so I don't see myself picking up a new Nokia any time soon (By coincidence, I'm out to go buy a new phone/plan this afternoon...)--but Nokia had to change directions, but fast, and their only real options were Android or WP7. If nothing else, they'll have a lot less competition within their niche.
On a related note, it's got to really sting for those who've (foolishly) bought a Symbian phone in the last year or so...they've pretty much been given the finger by Nokia with regard to software/developer support today. Not unlike what HPalm did by saying no WebOS2 for the Pre/Pixi(+).