Between Windows Vista and Windows 7, Microsoft changed exactly one thing. They replaced the two icons with a single text label that said "Shut down."
Nothing else changed. There was still a fly-out menu. There were still half-a-dozen options that users vaguely understood. They still had strange labels like "Hibernate" and "Sleep." There was still a "Log out" option. There was still a "Lock" option.
Turns out, none of that was the problem. The problem was that people didn't understand what the power icon did. Replace the icon with text that said "Shut down", and suddenly they knew what it did, and started clicking on it. They stopped opening the fly-out menu, and the "Paradox of Choice" went away.
The lesson is not that you should stop offering choices to your users! You can offer simplicity and choice at the same time. Just stop replacing text labels with confusing icons.
Windows 95/98/Me/NT/2000 had a "Shut down" text label. Windows XP had both an icon and text. Windows Vista had an icon but no text. Windows 7 went back to just text. The only design that caused confusion was Windows Vista.