My opinion is that Google needs to draw a line under this whole issue. They need to hold up their hands say "you know what, we didn't realize what we were doing here but we get it now, this was wrong, we're sorry." And within hours of making that statement, pull the whole product off the Internet, and send massive bunches of flowers to the people worst and most publicly affected by the fiasco. In the end, Google is a company with a huge amount of our personal data who's success depends on us trusting them with that data. The precariousness of Google's possession of personal data is debated routinely. And so far a lot of those discussions conclude with someone citing their motto and impeccable past records (the China thing was awesome too). What now? Now, that record has been tarnished. At what cost should that record be maintained? I think killing off Buzz is a small price.
Google really needs to show everyone how seriously it takes people's privacy. I hope they don't miss this opportunity to demonstrate that.