Simsi - 10:10 am on Jul 31, 2010 (gmt 0)
Your average searcher doesn't know the difference between paid results or organic. They are going to click the results that stand out the most, purple.
If it didn't say "Sponsored Links" next to them I might agree, but as it does, so I don't LOL.
I think the move to purple is good for us webmasters personally, but I still don't like the fact Sponsored Links are at the top of the page. OK it's a money thing, but it can be counterproductive by pushing down the sites in organic. If the algo is as good as it should be, those would be more relevant than Paid Links most of the time.
Sort of a catch22 for Google. Make more money, but dilute the relevancy of search results. If you get the balance wrong, you could lose the people who click the Paid Links and effectively generate the income.