You're missing the point. Google feels a need to respond to Bing, which it hasn't before. However stupid you may think the ads are, Google is responding as if Bing is a (potentially) legitimate threat.
I suspect others think this way and Google knows it.
Right now Bing is a better search engine even if the only reason is that fewer people are trying to game it. The thing that makes Google most useful is searching other people's sites (e.g. adding +site:news.bbc.co.uk to your search terms). As a standalone service, they're going the way Altavista went.
I have no doubt that Google will improve and adjust to any threats Bing might one day bring. The cost of me moving all of my data and changing habits to another place would be high. That and there is no way in hell I'd trust Microsoft with my data.