"So it's a little surprising that ... the current version of Java has only about half of Java developers actually deploying to it."
I am a big fan of Java, but it isn't the language that I am attracted to. Frankly, I think that C# (and .NET in general) may be a better language/framework. The reason I favor Java is because of the (free) tool support. I think that the future of programming will be more about the tools, and less about the language... and Java, now 10 years old, has the tools available.
So, with that in mind, my reasoning for sticking with Java 1.4 is because the tools haven't caught up to Java 5. Once the tools catch up, then I expect to switch.