I watched the video they released on improving search quality yesterday (http://insidesearch.blogspot.com/2012/03/video-search-qualit...) and was initially impressed that they gave so much thought to slightly improving a small subset of 0.1% of queries. That meeting must have had 40 people attending!
But afterwards it left me with the feeling that Google is becoming so big and entrenched in old ways of doing things, that they may not be focusing enough on the next big improvement in search. Penalties and heuristics can only go so far -- eventually they'll need something approaching AI -- and if any company can do it it's Google.