Note that this is not an official Google project, but was done by a Google employee in his "20%" time. I would be wary of interpreting this as Google endorsing Bitcoin, or as implying that Google would defend Bitcoin if it were subjected to legal scrutiny.
Right, that has a lot to do with why I mentioned its unofficial status in the first clause. The point is that they could have left this unaffiliated with Google altogether, but at least chose some level of association, which helps to get Bitcoin good press.
Though not yet an "official" project, Google has released a Bitcoin client. As you may remember, there were concerns here about what the government/legal reaction to Bitcoin [1] will be, and the significance of certain groups lending their support to it. EFF and SIAI accept Bitcoin donations, which helps, and this action by Google is another big step.
Previous articles: SIAI accepting Bitcoin donations, Discussion on making money with Bitcoin (Clippy warning on the latter)
[1] In short, it's an anonymous P2P crypto-currency with no transaction fees, in which new units are generated by spending computer cycles computing hashes until you find one with specific properties.