Really? So you'll be working away, on your document or your spreadsheet, or you'll be playing a game, and some ad will pop up, and off you go, zero attention span? Why would anyone want that?
$50 on your Netbook isn't much if it means you hand your thesis in on time...
No, not really. I doubt there will be ads in Docs & Spreadsheets. But there ARE and WILL BE ads in Gmail* and Google search results. The main idea is to keep you in Google's ecosystem and to make advertising on the web more valuable.
Selling advertisings isn't about creating new places to put ads--it's about making advertising space more valuable. And that isn't as straightforward as you seem to think. :)
Release an OS that will drive traffic to your [...] search engine where you can sell ads.
Not far removed at all. Google makes billions by selling ads. Even if they budget a couple of million $/year for this project (might be less, depending on how you structure the proejct), they'll be making crazy returns if this increases their ad revenue just by 0.001. Not to mention all the FUD it'll cause inside MS :)
lately youtube has been inserting overlays on top of playing videos, a highly annoying feature. If they ever do that to google docs there will be a mass exodus.