Some more info on privacy related stuff...
Most interesting bit... "The contents of your Gmail account also are stored and maintained on Google servers in order to provide the service. Indeed, residual copies of email may remain on our systems, even after you have deleted them from your mailbox or after the termination of your account."
So, it looks like you were right... they are thinking of not deleting the email at all. I don't see how they will handle the space issue. Keep growing infinitely?