Well, their changes to Terms of Service is actually good news for users. The new terms are simpler, more universal, and seem a bit easier to understand. Part of the problem with any Internet service that allows you to post things, upload things, share things, email things, or otherwise use the Internet is that it requires your consent for modifying, copying, distributing, publishing, and displaying that content. Otherwise how are they going to post that adorable kitten picture on your blog? They've got to modify the image to fit on different size screens and allow a copy of it to show up on the screen of any user who checks your blog, and they need those thumbnails of kittens to show up in your Google Reader feed.
On top of that, they need your permission to keep some of those rights, even after you've removed your content. Someone may not have read their email where you sent a copy of that adorable kitten picture, or they may have saved a copy for later.
Those are the rights they need to make the Web work, but it's hard to phrase it in a way that makes it clear to users. There was a recent outbreak of panic over Google+ terms of service, for example, even though they were using the same terms that most of the other Google services use.
The new copy applies to all services, except those that specify otherwise. That's mainly going to be things like open source software, where it's perfectly ok to modify it, change the code, and redistribute it. You're not allowed to do the same thing to Google Earth software.
That much seems like good news when it comes to actually using the services, but don't expect everyone to be happy about it. Privacy is a delicate dance, and Google has messed this up before. Part of the downfall of Google Buzz was that they initially populated it with your email contacts. Just because you'd emailed someone, it didn't mean that you wanted them to see all your stuff (or, as it turns out, ever speak to them again). Worse yet, your contacts could see all your other contacts, making it a bit awkward if your spouse sees that you've been contacting a divorce attorney.
You should also note, even though it's scrunched down on the bottom of the page, that Google Books, Google Wallet, and Chrome have different privacy policies. This is a good thing. Google Wallet can store credit card numbers, and we don't want that shared with just anyone.
Google is tracking your hardware. They've been doing this all along, but there it is, all spelled out. They know how you're getting to Google. If you're using a phone, they know where you are. They know what you've installed on your Android phone, and they're allowing you to store personally identifying information on your device. (You pretty much need to do that to use either Chrome or Android.) Google is storing your phone numbers and logging your search queries, but it could be worse. Sprint has been tracking all your keystrokes.
The Bottom Line
What does this new policy mean for you?
It means your various Google services will work better together. It probably means less logging in between sites. It also means you're going to have to either log out of Google when you want privacy or come to accept that Google has had this information all along, most of which is information you've voluntarily handed them.