Yes and no. Some features, like the XP-style Start Menu, have been removed in Windows 7 (just as the 9x-style Start Menu was removed in Vista). Those wanting to use a Start Menu that isn't included will need to use a third-party add-on or just stick with the last OS to support it. The same goes for other deprecated features that eventually get removed entirely.
As for Windows running faster without Aero, it's actually quite the opposite; Aero is faster than Basic because it is entirely GPU-accelerated. Any modest GPU (one with a minimum of 64MB of VRAM and a WDDM-compliant Vista/7 driver) can run 7's Aero at full speed even with all the fancy effects enabled. Aero automatically switches to Basic when playing a fullscreen game so that all GPU resources are made available, so there is no performance hit when gaming; when not playing a game the GPU mostly sits idle anyway, so Aero makes good use of it. Other non-gaming tasks also benefit from GPU acceleration, such as WMV and Silverlight video playback.

The reason for this is that XP's GUI was not hardware-accelerated (Vista's was the first to do this), so the fancy effects did indeed slow the system down to some degree. The performance change you were seeing wasn't just in your head. :)

Yeah I know, the thing with the system I do this on is that its an elderly 1ghz athlon with 256mb of ram so any positive change is especially notable