Libel is libel. Why should someone have free reign to publish untrue statements about another person with no fear of repercussion? Your reputation plays an enormous role in both your professional and personal life, and you should have the ability to protect it.
The court, in this case, required that they show evidence of libel (which they did) before compelling google to hand over the blogger. I think this ruling is an outstanding one. Speech can be damaging, and folks who engage in libelous or slanderous speech deserve what they get.