This question is an important one. And it's not one that can be answered easily.
For me, yes. It's ready. If I use Windows or Mac, I use all of the open source stuff that Linux comes with by default - Firefox, whatever Notepad application I can find, VLC Player, etc. I find myself missing Linux's features, such as the repository system or the UI customization.
For me, Linux is the only desktop ready. Windows and Mac simply do not fit my needs. But I am biased.
For other people, Linux doesn't have the proprietary programs or games necessary. If there's anything that Windows does better than Linux, that is being a home to millions of programs that some people simply need.
For them, would you say Linux isn't ready for the desktop? No. I would say that Linux isn't home to the applications they need. This isn't a fault of Linux, this is a fault of the current computer industry situation.
Just looking at it from a certain standpoint and making a judgement on it is silly. Is it prettier than the competition? Well, it's typically simple, clean and unencumbered with annoyances. I personally don't like the Mac OS X interface - the top bar changes too much and everything is all too dynamic. Windows 7 appears to be moving in the same "shifting UI" direction. I don't want that.
In that case, Gnome works. Openbox works. Xfce works. Are they works of art? No. They're computer interfaces. They're supposed to function. I use Gnome because it does so while being as simple as possible.
This is all subjective, but so is the initial question - is Linux ready for the desktop? Yes. Without a doubt.