Here is a nice article from Slate:

http://slate.com/id/2144896/

It speculates that Google could try to implement something like a "network PC" through a web browser like at

http://www.youos.com

Personally, I don't see Google aiming at something that looks like a traditional desktop. Things more like Google Notebook and Google Gadgets, if implemented in a platform-independent fashion, seem a more likely approach.

I agree with checkerhead.

It will come gradually, one gadget or application at a time, until one day we wake up and think "Wow, that Google Desktop thing we used to talk about, it's here in my browser, now. I haven't used any application outside my browser for months..."