The problem I see is in the timing. Android isn't all that important right now, but it's just on the cusp of being so. There are close to a dozen new Android phones slated for Q3 and Q4 release and there has been talk of Android on some netbooks (but with the ChromeOS announcement, who knows what's going on there).
The reason I ditched my Blackberry and bought an Android phone was because I wanted a device that is based on open standards. This would inevitably create a vibrant developer/modder community and make Android a very powerful platform. Things were definitely trending that way, but for Google to slam the brakes on that just as it was gaining momentum is a bad move. Now I'm locked into a contract so I'll be following this problem closely for a while, but I'm also going to start paying a lot more attention to Moblin. This definitely changes my view of Google, whose services I use extensively (GMail, Google Voice, Google Docs, etc). If their corporate philosophy is going to start evolving into "Microsoft, the Sequel", I'm going to start looking for alternatives.