This is a difficult thing for me to admit, but I think Firefox 3 is better than Internet Explorer 7. Having worked on the IE team, I am the first one to defend it, apologize for it, and staunchly refuse to use anything else. So how could this have happened?
Well, the product I work on now is a plug-in for both Firefox and IE. Since I am primarily responsible for the IE version, and I do most of my development and debugging of our product when it is running inside IE. As a result I am forced to use Firefox to read e-mail and such while my IE install is in a bad state.
Firefox 2 was usable, but I liked IE much better still. A lot of really good UI work went into IE 7 around the Tab UI and optimizing away the old menu bar. Sure, it has its faults and quirks, but I still felt more at home in IE.
Now that Firefox 3 is out, I basically have been converted without even thinking about it. And that's the key: when I use Firefox 3, I don't notice that it isn't IE. The only time I notice it's Firefox is when it does something better than IE, like spell checking my edit boxes, or remembering the URLs from my last session.
It's the little things that matter.
When I use IE now, it feels slow and poorly put together. Firefox is snappy; the UI is more polished. They stole some ideas from IE (The Gold Bar) and made them better. They have some ideas of their own (disjoint search term matching in autocomplete) that are great, too.
And as a good friend of mine used to say, "if it ain't snappy, it's crappy."
So Firefox 3 sets a high bar for the IE team to meet. I sincerely hope they blow it away. I think it is way too early to judge the IE8 UI; I will just have to wait and see how it shapes up.