People are disappointed because Samsung has traditionally upped various specs on the Note line over the S line. The rumours out there took the most obvious specs (ram, processor, battery, maybe camera) and jacked them up a bit, and thats what people expected or even held out upgrading for. Samsung's previous upgrade path and the rumour mill had expectations a little high.
Surprised to see a smaller battery myself. I was hoping for an all-flat version as well, did not like the curved screen. But am I mad? No, the S line this year is just so solid that it would have been tough to beat it. The N7 is a small upgrade to the best phone out there IMO, which still makes it the best phone for the non-Apple crowd.