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We, as user, giving up some privacy which we consider to be less vital for targeted service.
and by the way if my groccer knows that I'm looking for some product and will offer it to me in better terms - this is improved service.
I'm not against protection of our privacy, I think that companies that compormised our privacy (Such as Sony and Symantec) will loose customers. However I do not think that Google is in the same boat.
The deal with AOL has nothing to do with this. And by the way if you read the details of this deal it seems that Google going to mark AOL content so you will know it was push as ad. seems OK to me.
these are good points. however all the cases you present using your private information for marketing. the only legitimacy, as you mention, is that you accept direct use Vs. indirect use. I'm not sure that I agree but I would like to think about it.
One more thing, Are you sure that Google storing the key words from your e-mails? I'm pretty sure they don't. if they would you would have seen improvment in the ads served to your e-mails or based on connection between different e-mails - and this is not the case.