Wow, makes me not want to use their services! Although I guarentee most search engines are doing, and have been doing this for a while. .........Big Brother Is Watching..........
This is actually nothing new. Google has been tracking your information basically since they started. Youtube, maps, email, calendars... it keeps track of you in all of those (if you are logged in, you can see the data they have on you here: https://www.google.com/dashboard/). The only difference now is that it will have all of that information in one place. So your searches on youtube, maps, and google will help send more relevant ads to your email. This will probably help google make more money, but you the average user will have a more unified experience across all of googles' services. For me, the biggest worry is that if google gets hacked all of that information is out there, rather than bits and pieces. Although, it really doesn't concern me what privacy policy is in place if my gmail account got hacked... im screwed either way. You should be sure to use private/incognito mode on your browser for your more illicit endeavors online.
So basically I'm gonna get a bunch of porn ads huh? Awesome! My computer will be assigned to porn and surfing......