I'll quote this, then expand on it:
Desktop environment doesn't work as well with touchscreen input, So I can see Microsoft wanting to remove it completely, especially for those upcoming 7" arm devices.I don't think the desktop will be bone forever, but I think the layers will change.
Currently Metro runs on top of the desktop. you can do a fair amount, but more intricate stuff requires you to drop down to the Desktop.
I think Microsoft will try to make metro the core, with desktop more of a sandboxed "virtual machine"/compatibility mode. RT devices will have Desktop gone completely, but x86 computers will still have desktop for the foreseeable future. Once the core is rebuilt, Microsoft may begin to either block code that doesn't use preferred APIs, or some other method of discouraging the use of 1990's legacy code while promoting newer, compliant, and safer code.
But Desktop has so many of Windows programs (even Office RT, but that may change in Gemini or later), so Microsoft will still require it. I can foresee it being separated from the core more, even to the point of eventually being a downloadable addon like XP-mode.
I have to admit that in the short term Microsoft will do as much as possible to kill desktop mode in order to promote Metro developement. Developers are simply not coding for Metro, because their applications still work perfectly fine. BUT, a proper window manager is just too damn useful to get rid of completely. It may not be entirely familiar, as I expect Microsoft will strip support for most non-Metro APIs (like activeX or DLLs). But it will continue to exist. I don't think the API stripping would be too bad, primarily stuff that heralds back to XP and is exploitable or unreliable.
But there's really no way to know for sure. It is Microsoft's call, but they still need to sell their product. And desktops are a core part of their business.