When I updated to the latest kernel (2.6.32-17 generic AMD64) yesterday,
my default boot moved from Windows 7 at the bottom of my GRUB2 menu to 2
spots up and made the default memtest86+ and Windows 7 was still at the
bottom of the list. Of course two items, the new kernel in both single
user and normal mode were placed at the top of the menu. I had to use
startup-manager to restore my default.

This appears to be buggy behavior to me, and appears to validate the
OP's experience.

I manually partitioned on the clean install of Beta 1 and specified ext3
for / instead of ext4. Space for Ubuntu was created in Windows 7. Yes,
I'm trying to break this--many people upgrading may still be using ext3
with live data.

-- 
grub does not list Windows 7 anymore
https://bugs.launchpad.net/bugs/545033
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