Google prefers to acquire startups that are pre-revenue

That's the slightly cynical view. Another is that they want the team.

Yet another that seems most plausible to me is that pre-revenue probably means pre-baggage. If they want to shut down the service & use the technology in some new or existing Google service but some users have already prepayed for two years, how do they get out of that?

A variation of your suggestion is that they aren't really interested in your revenue so they don't want to pay for it. Most of Google's products are not directly revenue generating. That makes some sense to me. They don't want 200 $5m businesses. They want to add another billion to their existing businesses or build a new billion dollar business.

Look over these acquisitions. In which case was google out to 'buy a business' in the revenue/cashflow sense? http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google

Surely. But this is still great news for entrepreneurs--start your company, get bought for $10M or so, work at Google for 6-12 months gaining contacts and big-infrastructure experience and then leave to do the next thing.

If so, it sounds like they are basically just hiring with a larger-than-typical signing bonus.

I wonder if the teams being acquired in that fashion view it that way?

Dodgeball is a famous Google acquisition because it got purchased and died. However, it's founder started foursquare post-Google.

The caveat here is that since they are looking for pre-revenue startups they are basically using the process as a short-circuited recruiting/hiring system. You are not going to get big money out of the deal because you have nothing that they want to pay for other than your future labor: the "acquisition price" is your hiring bonus.

You have to launch first. Don't call Google, they'll call you.