There's an amazing amount of blog coverage for this, but when it comes down to it, I don't really care who owns YouTube. I want a website where I can get video feeds (especially music videos, wacky advertisements, and weird shit) to post in my blog. I want it to be simple, I want it to be interoperable, and I don't care about the rest.
Sure, there are legal complications involved because of all the copyright infringing material available on YouTube. I can't wait until the real world catches up with the virtual world and realizes that when someone is showing a three-minute clip of a song, a movie or a TV skit they are advertising for you for free. This is the same load of malarkey (Hello, I am from the 1920s!) that raised the ire of content publishers with Google Book Search.
Is this surprising? Yes and no, Google has their own product that does the exact same thing but they missed the market completely (much like Google Talk). The ability to easily share videos via embedding on blogs and MySpace gave YouTube a much greater audience than Google Video. Google spent far too long having the useless Froogle on the homepage instead of Video.
Like Scobelizer said, this looks like mind-shift for Google where they are making real business decisions instead of listening to the engineers who say "that's easy, give me a week and I'll build it".
Will Google prove to content providers that the interwebnetwork medium is an exciting new opportunity for renewed profits? No, dinosaurs are old and stupid. They didn't understand that Google Book Search was a huge opportunity to bring content to an audience that was actively searching for it, they won't "get" GooTube either.
Will other video sharing companies start showing up for sale on eBay like Kiko? Yes, video is notoriously hard to add advertisements for because no one wants to wait through a 20-second pre-roll ad. Google has an existing advertising base and history in the advertisement business that they will tie it all together. There may be a spot for one or two other companies to get acquired by Microsoft or Yahoo, but in general Internet video is a crowded market that doesn't scale well and making money off of it is hard.
Is the ridiculously high evaluation of YouTube further proof of Bubble 2.0? Yes and no. ValleyWag calls YouTube the Hotmail of Bubble 2.0. But since the announcement Google stock has risen enough that this deal was a freebie.
What does this mean for the end user? Nothing. They're keeping the YouTube brand so all back-links should stay in place. If anything, YouTube should improve.
I feel kind of dirty for posting about this "just because everyone else is".
 <brash arrogance>I could have done it in two weeks. </brash arrogance>  Ok, maybe four.  Someone has bought the GooTube domain. If they build it into a YouTube for hentai tentacle porn I will personally send them $5 Canadian dollars ($4.41 USD).  Yes, I'm the kind of crazy geek who prefers DVD back-ups because I can rip out the locked-in trailers.  The more video you push, the more it costs to push video.  Six?Powered by Sidelines