It appears Google has decided it is time to put more resources into improving their many existing products (Gmail, News, Video, Maps, Picassa, Spreadsheets, Checkout, GoogleTalk, AdSense for Radio, GoogleReader, BlogSearch, GoogleGroups,…). That makes sense to me.
When Google had few other products I think it was likely wise to push a bunch of stuff out the door quickly. Now that they have a bunch of decent, but not really great products, adjusting and taking the opportunity to improve those product makes sense. In my opinion they have always been very focused on search and AdWords (The 70 Percent Solution) though even that could be improved some as Google has acknowledged.
This change while significant I believe is just an adjustment. Google will continue to march to its own tune: which is a good thing.