I flew a CO 737-700 back in July. Great flight. I loved this plane. Great performance on takeoff, and very smooth ride. Cruised nice and high, 37,000 feet.
Boeing produced the 737NG's to compete with the A320 family, which is obviously better than the 733, 734, and 735. Boeing already lost a few 737 customers to Airbus (UA, US, America West). Eventually, when DL and AA want to replace their MD-80's, they will order the -700, and their MD-80 fleets will be replaced by 73G's and 738's. CO ordered a large number of 737's because their MD-80's and 733's are some of the oldest around. The younger 733's will be around for a while, and so will the -500's, as they are only about 5-10 years old.