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Correct me if I'm wrong but if some parts of a distro go GPL v3 then don't all of the other pieces have to be v3 because v2 is not compatible?

No. Userspace and kernel space are two completely different areas, otherwise you'd be unable to run non-GPL programs in linux. Most distros, at least the non-extreme ones, use a mix of licensing in the included packages.

If Linus does not agree with v3 then that kinda causes problems doesn't it? After all, he is still the keeper of the kernel isn't he? How can you have a GPL v3 distro with a v2 kernel? I'm not trying to fight about this, but I would like some clarification from people that understand the GPL and all of its versions. Is there an IP lawyer in the audience

I'm not an IP lawyer, but you don't need one. See my point above; a v2 kernel can easily exist with non-v2 applications, they're not dependent upon each other. The fact that the kernel is built with tools that will soon become v3 also is irrelevant.

It's not just Linus' opposition that is a problem. There is no single person or organization that holds copyright for all of the code contributed to the kernel, that copyright is held by the developers or organizations contributing that code. Without copyright, you can't relicense (at least outside of the terms to original license provides). So whether Linus alone says no doesn't matter, it's whether any of the developers say no. There have been thousands of individual contributions to the kernel over time, converting to v3 would require consent from every person with code in the kernel. That's simply not feasible, particularly since some of those contributors are no longer alive.

If people decide to try and fork the kernel to follow v3 licensing, they will need to determine which of the developers are willing to relicense and will then have to scrub the kernel code to remove any code from developers that have not agreed to a relicense. A significant portion of the existing code came from organizations like HP and IBM, so it would not be unreasonable to say that without their consent a fork would simply not be possible, let alone feasible. To re-engineer and re-code those v2-only parts in a non-infringing manner would likely be exhaustive and those developers interested in doing so should most likely save themselves the hassle and just start working on Hurd.

This whole thing is really sad, because I love using Linux, I'm using it right now; why should any user have to worry about licenses? People who use Windows already have enough problems with restrictive licenses, they shouldn't have to worry about that stuff if they finally do switch over to Linux.

Doesn't have to be. In fact, really, it's a non-issue. The kernel devs have made their stance clear. The kernel is staying v2. Most of the noise and FUD is coming from others who believe the freedom of the developers to choose and standby a license somehow infringes upon the entitlement of users, or just don't understand the GPL. There are some that believe the FSF controls licensing on all GPL software, and that's simply not true. It's the copyright holders alone that control licensing on GPL'd software.

The rest of us are comfortable with the fact that nothing is going to change.