Allright, I've actually played around with it for some time now. And I've got to say, it works great. Just let me give a run down of its features one by one.
First of all, it is very polite while indexing. It only starts to index my files once the PC has been idle for a while. It's not a comprehensive index yet, only around 15,000 of the files have been indexed.
It integrates seamlessly with your normal Google web search. The idea is kinda nifty, the Google Desktop server here intercepts all traffic from Google, adds whatever data it finds relevant to the results, and displays it to you.
It also scans all the files on your PC, but as I mentioned, only delves into Office documents, AIM transcripts, Outlook Mail and IE history. Having Office documents indexed is great; don't care about AIM, most of my transcripts are in text format so they are displayed anyway; don't care about Outlook; and IE history is a contentious issue. You see, it remembers your IE history, and shows you locally cached versions of these pages in your results. No support for Firefox history yet, but I've turned off this feature anyway. Four people use this computer, and knowing each other's browsing history is not cool. Also, no support for PDF's and other file formats yet.
The cache is one its strong points. Older versions of your documents are stored in its local cache, and you can view any version you want. But as a result, it should use around 1Gb of my disk after it has finished it's indexing. 1Gb is a small price to pay for the added usability though.
Again, privacy is one of the main concerns here. If many people use the same PC, it could lead to some, ahem, problems. There is an option to specify directories which you want to "ignore", got to think about that. But something tells me this is gonna stick around on my PC for a long time, I find to too useful.