They're talking about a Google-tweaked version of Ubuntu.
Google has a lot of people and a lot of money... The perfect combination for a Linux distro to take on Microsoft. Personally, Ubuntu isn't what I'd choose, but hey... It's open, so it can be improved, and it's improving in the right direction.
Besides, even if it doesn't take over the world, it'll kick M$ and Apple in the pants hard enough to get THEIR product improving. Think IE when Firefox started climbing and Windows when MacOS started climbing.