This is what update-grub outputs (I keep typing grub-update because it just seems more logical):
$ sudo update-grub Generating grub.cfg ... Found linux image: /boot/vmlinuz-2.6.31-16-generic […] Found Windows 7 (loader) on /dev/sda1 […] done
This is what /etc/default/grub wants to set the default boot entry:
GRUB_DEFAULT="Windows 7 (loader) (on /dev/sda1)"
Thanks. That really made things so much simpler.