I agree.. to me this smells like Web TV - Remember that? I knew someone who had one.. a little old lady who just wanted to keep in touch with her kids via web email. It was horrible but good enough for her.
I think this will create a niche market for fans of netbooks and web app based cell phones like the Blackberry or IPhone who just want web apps and don't need anything more. I do not think it will be the future of computing. I don't think it will effect all of us real computer users.
Heck, you can do all of the Google OS stuff with a IPhone now plus you have the bonus that.. duh.. it's a Phone!
I think when technology makes the standard laptop super powerful, with a large hard drive space and smaller in size, this netbook Google OS thing will go the way of the web tv and the dinosaur. People will just want more out of their computer.