It's easy to see the user-experience story for this. Upgrade your phone, buy a tablet, etc, and as by magic all 10 wifi networks you use work without any configuration. No need to type that 32-character nuisance of a WPA2 password again, etc. How lovely!
Your conspiracy theory hinges on the idea that Google wants your precious wifi password for themselves, not for your convenience. That seems unlikely. Google doesn't care about your network. They might care about your web usage patterns insofar it makes it easier to provide better search results and improve ad targeting. Your network is worthless for that. Using the passwords to actually access these wifi networks would also be a massive legal and PR nightmare.
So on one side you have delighting users. On the other side you have a malicious attempt to gather useless data at massive risk. How can there even be a question of which explanation makes more sense?