I too went from a K100 to the K20 a bit over a year ago. I caught it at $650 right when the K7 was announced (could not pass up the price and the extended warranty was icing on the cake), and have enjoyed the last year shooting very much. The K7 is a very nice camera, however my decision was either the K20 then or wait until now with the K7, and I choose the bird in the hand. My skill level did improve pretty quickly with the additional control - so for that it was well worth it. The additional new features on the K7, obviously I would like to have, but my K20 is wonderful, so I will be skipping it, mainly because the K20 and K7 are relatively close in capability - and quite frankly, I can not afford to hit every generation. I am still not using the K20's capabilities to its fullest extent.
All of that said, Yes - the K7 is a success in my estimation. There is little wrong with it. If for some reason the new camera body does not support something very important to me - screw drive or in body stabilization - I will pick up a new K7 in a heart beat - in order to preserve my screw drive lenses - as I can not afford to walk away from my Pentax lens investment and to start over again. This way I figure I am good for quite a few years, at least until I keel over...
I was able to actually hold a K7 about 6 months ago at Fry's Electronics. It did feel wonderful, the size was perfect along with the weight. Pentax does need to keep this form factor, WR - rugged body - and build on this excellent form factor and base capabilities. Expanding the capability set will really leverage the K7's legacy.