Titled “Google at work on desktop Linux”, regdeveloper.co.uk speculates in what Google is up to with the Goobuntu distribution.
Update: Google denies the rumors.
Read about it here.
Google has confirmed it is working on a desktop linux project called Goobuntu, but declined to supply further details, including what the project is for.
However, entering the desktop software world would be a huge step. Making Goobuntu as easy to use as XP will require a lot more development. It's unlikely to be ready for showtime any time soon, and it's possible Google itself hasn't finalised where the project should go.
Google denies it all in this article at arstechnica.