Server makes more sense
It doesn't make sense for MS to release another tablet/handheld version of Windows as they've already got Windows Phone 7 (after all, Apple moved iOS from phone to tablet without too many problems). Also, an ARM version of a desktop OS like Windows 7 would require all current Wintel applications to be recompiled for a "WinARM" platform (assuming there won't be enough grunt to translate x86 on the fly).
Surely the best option for MS is to produce a server only version of Windows for ARM. This would only require recompilation of a (relatively) small number of enterprise applications, quite a few of which are MS products anyway. This would give enterprises the option of selecting a Microsoft OS for the ARM powered server farms which everyone is getting so excited about. It would also allow the desktop version of Windows to remain on the client workstations.