Read the article about Google’s vanity pages. Why do you think Google is doing this?
Imagine, through the signup process, they ask you to fill out personal information about your hobbies, interests, hometown, etc. Doesn’t that sound a lot like FaceBook profile?
Imagine the applications. Often people sign into Google b/c they’re checking email or doing a Google Search. This means Google can better target ads to you when you’re doing either of those actions.
Also, note they are asking you to “hook up” your other Google services that you use (like Picasa or YouTube). It’s like asking you to let them identify you when you are logged in at those places too. Then they can again push you more “relevant” material (i.e. ads).