There's been some roumors about google working on a browser. Apparently they've even registered gbrowser.com.
I've read on some blogs about google planning on an instant messenger and also a grand plan of a super OS. This is all speculation... nothing official, but it seems they are dipping their bud in a lot of areas.
Google is an exciting young company with a lot of bright ideas. They've been hiring the greatest brains from companies like Microsoft and Sun. Also doing some radical new stuff. Just as an example, on my bus ride to the Uni, there is a huge billboard for a google ad. The ad doesn't say that it's from google. Instead, it asks to solve a problem, which gives you a URL to a website, which asks another problem. If you get through it, they ask you to send your resume. Just some simple stuff like that which I don't think has ever been done before.
Having said all this great stuff about them, I'm a bit skeptical about the google browser, if it is true. I don't see what they could possibly come out with that will be a radical departure from Opera or Firefox, who are setting the standards for browser innovation. Sure, google has great services - search, mail, groups, but I don't see the rational in coming out with a browser just to "connect" all those properties, as some people have been speculating. Do you? And if they do come out with one, what dyou think the reaction of the open source community will be? They are behind Firefox/Mozilla full force.