So Google has now admitted that it has compromised its principals when it comes to China (see: http://news.yahoo.com/s/ap/20060607/ap_on_hi_te/google_censorship_5) and the censorship of its search results.
So the first question one needs to ask is "SO?" While I personally don't like censorship, Google is already conducting censorship in North America just not as obviously as when an government asks them not to list specific sites.
Don't believe me! By their own admission, if they discover you've used some black hat SEO techniques on your site, they can blacklist you from their index. That is a form of censorship. Yes saying you "must not do XXX on your site or else we won't list you" is a form of censorship.
How about when you build a brand new site only to have Google put you in the Google sandbox. This may be a temporary form of censorship, but you are still penalized for being a new site.
Google makes no claims that their index contains every web site in the world. Nor is there ever a guarantee that they will index you despite your best SEO efforts.
As a private company they have the right to modify their product to best fit their customers and their market. Go to a pizza parlor in Jerusalem, because of the religious dietary laws, you won't get meat on your cheese pizza. In Muslim countries the government may require restaurants to only server Halla meats and no pork. Is this any different then telling Google they can not server up specific sites to people of that country? In the first instance they are trying to stop people from consuming specific foods that are forbidden by their religion and in the other they are trying to stop people from consuming specific knowledge that is forbidden by their government.
Yes, I agree what China is doing is bad and it is right up there with the people who keep trying to stop the teaching of evolution, but let's not blame Google or the other search engines for trying to make money and expand their markets. Set the blame where it belongs on the governments that set the rules we all live and work within.