It's such a shame that it has come to loggerheads like this. I think the Google's digital library is a great idea. They did, indeed, fuck up by putting up copyrighted material first and then beg for forgiveness after, though--given how incredibly stodgy the publishing industry is--I don't doubt that they thought this was easier than asking permission, even with the ensuing legal complications. But the settlement, though not perfect, makes some good redresses and more importantly sets out a workable plan for future collaboration (if, indeed, both parties would actually collaborate).
As a writer, I see this as a plus. A Google-based digital library/store would provide unheard-of access for writers to reach an audience, and enormous choice for consumers, to say nothing of being paired with one of the most efficient search engines out there. Full disclosure: this would obviously be a better deal for small-time, independant authors like myself, who have rather limited print runs and even moreso geographical distribution in brick-and-mortar stores, than it would for major authors the the backing of a publishing house.
As a researcher, Google Books has proven an unexpected boon. A couple months back, I needed to access a rare text; even a few years ago, that would have entailed going all the way out to Ann Arbor, spending a day or two in UMich's rare books section to get what I thought I would need, since after I leave I can't consult the text anymore. Now, a fully scanned original edition (complete with typesetting errors and marginalia!) is available with only a few keystrokes from my homepage. That kind of ease of access is a thing of beauty.
Obviously, this was a text no longer in copyright, but even contemporary works can benefit from this. The scope, refinement of the search engine, and ability to glance at select pages make it so much easier to locate useful texts, without spending hours spelunking through the library network in the hope of finding a copy (particularly troublesome for out-of-print works still in copyright), or blind-ordering a book only to find it far less useful than the abstract would have led you to believe. Obviously, steps need to be taken to protect the digital library from piracy or prevent pernicious practices like reading an entire copyrighted book in chunks of preview by switching terminals, but it's a program full of promise which, I think, we should work at perfecting to make it fair (pegging price increases at inflation?) rather than opposing altogether.
Fictitiously yours, Trent Roman