Daniweb has a hilarious article about "GNOME killing KDE" all because of Kubuntu 8.04 not being an LTS. The distinction that Daniweb fails to note is that Canonical considers KDE 4.0 to not be stable enough, not KDE as a whole. If they did, they wouldn't have shipped Kubuntu 6.06 LTS.
As for KDE 4.x, I think it will it be a pretty crazy and cool release. I worry slightly about some of the new tech not being stable enough and that hurting the image of KDE, but 4.1 and beyond should truly rock. And all this new tech should keep GNOME on its toes. Now how about a stable release schedule?