Google never wanted to try to cut out the middle-men. Google didn't want to push the phone too much. They just wanted to put it out there to be able to let them know, "Here, look, this is what you can do with this technology at this price point."
As was pointed out at http://news.ycombinator.com/item?id=1529657, Google achieved its aims. The Nexus One was a success. It can go away now.
If you pay attention, you'll often see companies do strange and counter-intuitive things because their goal isn't simply to make money on every single product. Study and learn, because they often aren't being nearly as stupid as you might think.
Google is betting that they benefit more from a lot of competitive browsers, than from having an iron grip on a single browser. Conversely, they can't allow someone else with an iron grip to hold the browser market back to benefit themselves. The same is true of the phone market.
Google's strategy with the Nexus One strategy is an occasional strategy. If you're not planning to go into a line of business, it is a lot of money to spend for uncertain reward. That said, I'm quite sure that Google would not be adverse to using it again if they found a good reason to do so.