"A week ago we showed that Google is truncating URLs in some cases. To my surprise, Jaime from the Google Web Search team picked up the story and decided to explain why Google does shorten URLs. He decided to post the details in a Google Web Search Help thread and added a comment at the original blog post."

http://www.seroundtable.com/archives/020247.html
http://www.seroundtable.com/archives/020293.html