I've been using it for a few hours now. while my initial reaction was "how could they!", after a while, it's not that annoying anymore.

I can now see the reasoning behind it - many people I know do not actively use the url bar except for searching. even when they want to check their facebook or favorite website, they just enter "facebook" in the url and use the (google) search results to get where they want to. for such users, the search box is much more important than the url itself, so why waste the UI space...