1. Linux does not play games well. Here I have to agree, the Windows Direct X experience is much more suited to real-time shoot-em ups without any twiddling.
Are you able to play Windows games on Linux? Yes, but you have to use and configure an emulator. The most widely used one is Wine, and that is not for the faint of heart. My experience entailed several layers of frustration.
My suggestion is to create an emulator that recognizes and configures the Linux Video and Audio system settings to a game's requirements. Not exactly easy, but I am sure there are talented programmers out in the wild that can accomplish this task.
Now ask yourself an honest question, how many highly video intensive games are you playing? If your PC experience is built around a business, email, word processing, spreadsheets, contact lists, streaming video, instant messaging, etc, that is all built into Linux. Linux is more than competitive in this context.
2. There are too many branches of Linux to make it competitive. In my experience there are about four or five choices that perpetually remain at the top rankings of http://www.distrowatch.com Most of these are Debian based, all of them eventually use the same Linux Kernel. My suggestion is to look at the top five, stay with a Debian based repository. Debian is my personal preference because of the Apt and Synaptic installers. You have narrowed your choices down to two or three distributions (distros).
Ubuntu has a huge following, and uses the Gnome interface. I prefer Mepis because of the KDE interface and because Warren Woodword make the best installers going. His installation scripts are rock solid. My PC is 5 years old and the Mepis installation was smooth as silk. There were no errors at all. I was up and running in ~25 minutes.
Look at the distrowatch site. Find an implementation that suits your preferences. Download an ISO. Most of the main Linux distributions offer a Live CD ISO. These let you try the system before installing. The myriad of Linux Distros has just been reduced to one.
3. Did I mention that Linux offers tons of free software? I do not use Windows Office products anymore. I am using the Open Office suite of tools on XP as well. There are literally thousands of choices to retrieve. So look at what you have spent on an OS, Office Tools and other software and examine what could be saved in the long run. Do a Google on "Windows Linux Equivalent Applications" You will be amazed at what is offered.
This is a prime factor in considering Linux. Some of the Open Source applications have been ported to Windows now. I still believe that I have saved $1500 - $2000 USD in software that would have been purchased for Windows.
4. New software lags behind the development for Windows. Yes this is absolutely true, for example the Chrome browser only runs on XP and Vista. This is sheer market share. Windows is king right now. My opinion here is that MS does a great job on promotion, but not on implementation. XP has been pretty stable, but Vista has been less than stellar. Windows 7 is due out Q4 2009. My company has decided to fore go Vista and wait for Windows 7.
The main distros of Linux are a better quality product. The security of the system is better. Viral attacks are diminished, but again that is due to market share. Crackers simply do not target the Linux share as often as Windows. I believe that Linux is less susceptible to virii but no system is immune. The biggest factor holding Linux back is the lack of promotion. The question is how to convince a large audience to move from the Windows world?
Since Linux is an Open Source movement it will never be able to compete in an advertising competition with Microsoft. Two things must happen to allow a gain of market share.
A. Use word of mouth advertising, blogs, wikis, social media sites to increase awareness of the available option. If you are a Linux advocate, then learn how to present its merits to a person questioning your sanity quickly. Think about an "elevator nugget" or a 140 character limit on Twitter.
B. Use hardware dealers that allow a PC build out without an operating system. The consumer should actually get the PC for less money. However, there may be a very large collusion hurdle to overcome between MS, Intel and the Hardware supplier giants to achieve this cost reduction. One option is to look for the Mom and Pop shops that sell basic PC kits, if you are feeling adventurous or have access to a friendly PC hobbyist.
Finally, before you do anything to your system, backup important data! You should be doing that on a regular basis anyway. If you are not, why not? One good bolt of lightning will create some havoc that you don't really need. Trust me on this one, living in the Midwest, thunderstorms are common.
Do the necessary due diligence to understand installation procedures. Have a plan. Take notes as you go along. Do you know all of your passwords to various locations, or is the current OS "remembering" them for you? Make a list of these. Last but not least - RTFM - many people have spent hundreds of hours documenting the system of choice. Read it!