I can confirm this issue too for Windows XP. My wife and her co-workers have a mix of iPhone 4 and 4s and after upgrading to 7.1 are no longer able to transfer photos from their iPhone to their Windows XP machines. It's a problem as they need to be able to do this as part of their work.
As for Windows 7, I can connect my iPhone 5 to my work Windows 7 PC no problem. And of course I have no issue connecting to any of my Macs đ
As I don't have access to a Windows XP machine, I tried to reproduce the issue by setting up a Windows XP virtual machine on my MacBook Air, and there I had no issues at all, and I didn't even get the "Trust this computer" alert, so I'm guessing that using a VM is masking the problem.
I'm going see if my wife can install iTunes on her work PC to see if that resolves the problem. If that is indeed a solution, then it's nothing to do with "Apple forcing us to install iTunes" as some above have suggested, but much more likely that the iTunes install provides updates to the drivers used to connect iOS devices.