I found this image in a blog, about confirming rumors of Google working on a OS. I've heard that rumor thousand times but now there is an image to back it up. Check for yourself.

For me Google and Ubuntu is a relationship made in heaven :)

http://www.tribbleagency.com/?p=266

Yes, Google uses a customized version of Ubuntu company-wide. No, it is not a secret project or intended for mass release.

Responding to your source, I imagine it's not that hard for a company like Google stock-full of talented people to replace a few logos here and there.

Here's the wiki link: http://en.wikipedia.org/wiki/Goobuntu

Everything Mysterius here said is 100% right.

All i can add is that there's no need of a Google OS, cause it's already on the web.
Like Docs&Spreadsheets, Presently should be here soon, Calendar, Notebook, Sketch-Up, Talk, Picasa, etc.

Essentially it will become a Web Software suite. I'll be even more excited when and if they release a free version of the Green Border software. Then you won't have to fret so much about your browser screwing up your real OS.