A little too late, don't you think?
The subgroup of people who prefer pseudo-names is relatively small compared to the larger population. It seemed pretty clear that they'd become more lax after attracting enough users who didn't mind using their given names. I am surprised that they added another field for it, though. I figured they'd just stop enforcing the policy.
apart from facebook (which cleverly leveraged existing relationships to create a culture where 'real' names were expected) virtually every single internet community is comprised of people operating under pseudonyms. i'd say the subgroup of people who prefer pseudo-names is the larger population.
They wanted a product that took your social life online. To that end, they tried to attract those kinds of people. The majority of sites with pseudonyms are open forums or comment boards. Most of the people you meet there you've never met offline. You can't offer people like that photo-tagging software or groups to set up real-life meets.
To chadmalik and gurkendoktor: Both of you are right. There are justifications for concern over privacy and I think Google went too far in enforcing its policy.
In fact, only the hackers I know use their real names online because they're freelancers and build a presence. I wonder if that leads to the assumption among hackers that only weirdos would ever need this feature. Stating that only n% of n% of n% would ever need privacy actually sounds even more insulting than just calling us "weirdos".