Consider Picasa.

Being a mac user, I haven't used it. But from what I've seen of it, I wish it was available for os x.

Now Google didn't build Picasa, instead they bought it, but they've suggested one of the primary reasons for doing so is to get Picasa's UI design folks on their team.

That said, I'm not sure the simple interface of Google Desktop is a hindrance for it, especially if you could use it via the Google Deskbar sitting in your task tray. The Google philosophy is to point you to your information and then get out of your way.

Of course you're right: a big challenge will be for them to find another revenue source. That whole company riding on the advertising revenue seems a little precarious.