Ogle Earth has a nice analysis of why Google have bought SketchUp. It suggests that Google intend to encourage the Google Earth community to add the 3D models of their immediate locations, and to use SketchUp to do it.
Chuck in Flikr, some geotagging, and a decent algorithm to stitch it all together, and who needs satellite images?
Yes this idea is cool, as is Google Earth itself, but the big thing (for me) about Google Earth is the possibility of building commercial applications and services on top of it. Would it be possible to do this on top of ad-hoc, conflicting, unreliable, community submitted datasets? For the kind of applications I am interested in, I doubt it, but for the sort of social applications (currently all the rage) I expect it would be very suitable.
It will be very interesting to see how this progresses, and how Google eventually make any money out of it.