No, you missed the point. Time Machine restores data only. Restore Points is for applications. Both are good for different things and really they are mutually exclusive.
You're also missing the point.
In Windows Vista and 7, the Windows Shadow Copy service has been integrated with System Restore.
That means that "previous versions" of files like documents CAN be recovered.
Files are backed up daily and whenever a restore point is created.
The main advantage of this approach over Time Machine, is that it can happen without additional hardware being attached. I have a MacBook, it's not connected to an external hard drive very often, so I don't use Time Machine.
Even if it was, I don't want to dedicate an expensive drive to something that is likely to remain pointless 99% of the time.
My main issue with it is that the only time I am likely to use the feature, is when it wont work - because the computer hasn't been connected to the drive and the file I need wont have been backed up. Windows 7's "Previous Versions" doesn't have that issue.