Users have a very different set of goals, with Google we know that the falloff from the top search result to the bottom is huge, people expect that the relevant results are the top couple.
With product search there's different goals, for example browsing an minimal set of criteria looking for a results--you're looking a pair of jeans and starting with 36x32; or the opposite you just want to know the price of a pair of New Balance 990s in a 11 4E.
In the latter case infinite scroll or not doesn't come into play, but the browsing case it does, and from the point of view as an Etsy customer, I have the most difficulties.
One of the things I've found the most is people do better with a task if they can understand how long it's going to take. If you know there's 100 search results over 5 pages, you can decide if that's too much to go through. As an aside, this is true of a lot of things, you'll do better with pull-ups if I tell you to do 20 and give you a count, than just tell you to keep going until I say "stop".
With infinite scroll you've got no idea how much effort looking through the total search results is going to take. Etsy don't make things easy, as an example Art > Custom Portraits[1]. I have no idea how many results there are, I can scroll all the way to the bottom and find out there are at least 8 pages, but that's it.
The search results themselves are pretty snappy, so I don't see a huge advantage of infinite scrolling. I do think the search results are pretty bad and the lack of filtering is a problem. From Art > Custom Portraits I can filter on just Pets or Silhouettes or More (which I assume is everything else). It's not obvious what these links do either, they are just floating at the top.
Some better filtering, e.g. by price, would help. I'm not sure what other metadata Etsy have that would be useful for an great faceted search.
As an aside, I've been working on (product) search for over a decade and I'm close by the Etsy offices; over a coffee I'd be happy to discuss search. Part of my New Years resolution is to do a better job of networking, so I'm happy to extend this offer to any other NYC based e-commerce shops.
[1] http://www.etsy.com/browse/art/custom-portraits?ref=br_nav_n...