According to the Windows Supersite that is the case! The announcement was very brief – in fact the bulk of it was in the subject line of the post:

Exclusive: Microsoft to remove 3 app limit from Windows 7 Starter

Yep – that is it.  He mentions in the two sentence long post that he is not sure about the inability to change desktop wallpapers on the Started Edition which is also a previously announced limitation.

I wonder if this wasn’t a little effort to assess the general opinion that everyone would have about a reduced functionality in this version of Windows 7 and then adjust the end product – at this point in development that would likely not be very hard. 

Just a thought.

Personally – I would get at least Windows 7 Home Premium or Professional Edition for my ASUS Eee PC 1000HE net book.  It is currently running the Windows 7 Release Candidate like a champ so I do not believe I would revert to a version with reduced capability once it all RTM’s.