Linux works in a lot of the embedded market, but certainly not all. It sounds to me like you have done your research and found it didn't fit for you. However over time I think you will first of all find that the minimum requirements for embedded Linux will fall a little more, and the fixed cost of meeting those requirements will fall a lot more.

Therefore even though you are not choosing it now, you have every reason to believe that in a couple of years you would be likely to make the opposite decision. And that raises a couple of very interesting issues.

First of all Linux support. Anecdotal evidence is that technical support for Linux is very good. There is reason to believe that it will get better since as the embedded market matures that will be all that really differentiates the vendors.

Second of all what is the future of vxWorks et al? You are depending upon support for them. But Linux is looking to eat away their current revenue base, and you have to ask questions about what new markets they have. History says that when companies run into financial crunches, they tend to start trying to cut back and quality suffers. I don't mean to spread FUD here, but think about what timeline you expect to need support over and whether you think that the vendor you are dealing with will be able to give that support. This is a sad decision that you need to make quite often in software and in business in general.

Thirdly there is a lot of misunderstanding about the entire, "You can fix problems yourself" facet of Open Source. Yes, you can theoretically fix problems yourself. That doesn't mean that you should. As Bob Young likes to comment, buying proprietary software is like buying a car with the hood welded shut. We buy cars with hoods that are not welded shut. There are a lot of good reasons to do so. One of the best is that we then get a competitive market in auto-mechanics. And in fact companies like LinuxCare are willing to take contracts to fix problems in open-source software. (Specifically in the Linux kernel.)

Now I don't say that after all of this you will decide on Linux. In fact in your case you may well not. But long-term, for a fixed need, betting against Linux in the embedded space is IMNSHO stupid. However short-term, for a fixed use, it may well be insane to go with Linux.

History shows that in computers, the commodity wins. History also shows that in computers, the commodity is often not the best choice to make at a given point in time. :-)