Well, okay, they probably won't take over the world. Not in six months at least. But that is when they are speculated to go ahead with some sort of "GoogleOS" that could compete directly with Windows Vista.
I tried out a couple of the "WebOS" applications (AJAX / Java based) that run inside of you browser window like Gmail and Google Calendar do, and they are pretty cool, but I don't think it would really compete with anything, since they run inside of another application that is running on a computer with an operating system.
Personally, I hope they do a full-featured Linux disto. That could make things interesting. Especially when you throw in the new graphical desktop features that open-source XGL hardware graphics acceleration can provide. (Check out YouTube for some impressive videos - search "XGL Linux")