I installed Google Desktop Search (GDS) yesterday morning. First thing I was impressed with was the size of the thing: 400K. As a developer, I know how difficult it is to pack that much functionality into just 400K these days. Of course, if it was 20 years ago, I would have howled about the 'huge' footprint.
I uninstalled GDS 8 hours later when my laptop reved up like a car with stuck accelerator. I was using Eclipse at the time so this version of GDS must have faulty idle detection algorithm. Since I don't enjoy writing code inside a jet engine (my laptop's two fans make a lot of noise when they are going at full speed), I uninstalled GDS to wait for a better version.
The problem with desktop search is that, while the file system, email archives, and browser cache offers extra metadata, there are no hyperlinks among desktop documents. Without hyperlinks, you can't do page ranking Google is famous for.
The only advantage Google has over other desktop search is tight integration with their website. While some people seem to be impressed with seeing the word 'Desktop' added to the Google homepage, I think the tight integration and blurring of the line between the Web and the desktop will result in confusion and concerns with little gain for Google.
The core problem here is that search engines like Google throws everything into one pot. For web search, all the web pages on the Net gets thrown into that pot. Thankfully, hyperlink-based pageranking pulls the good stuff to surface with minimal hassle. With desktop search, all of your documents gets thrown into the pot without an equivalent of page ranking to measure relevance. IMHO, there aren't enough metadata on the desktop to achieve the same level of utility Google web search offers.
Also, there is a problem that will surface in the future as desktop search over browser cache becomes ubiquitous: desktop spam. Websites will begin loading up their webpages so links to their websites will appear in desktop searches and, without page ranking, they will find it easier to catch the desktop searcher's eyes than web searchers.
Whether desktop search is a killer-app for the user or not, I have doubts whether it is a killer-app for Google. If they start showing ads on desktop search result pages, many users won't like it. If those ads are context-sensitive, meaning they are based on words in YOUR documents, even more users will howl.
I have other issues and possible solutions but I want to think them through before sharing them.