Edwin - 10:02 pm on Aug 19, 2010 (gmt 0)
A decent generic domain name is a "signal of quality". For popular commercial search phrases (especially 1-3 word ones) obtaining the exact-match generic can be an expensive proposition if you don't already own it from way-back-when... and that could be interpreted as one thing that separates the spammers from the players.
As such, these kinds of domains should be seen as prime commercial real estate in the heart of downtown. You could in theory put anything you like on the land, but in practice it will generally end up getting sold or leased to deeper pocketed businesses with a business model that "works" such that they can afford it.
And the simple fact that they are based in such a "prime location" is enough to lend real, palpable legitimacy to businesses situated there, even if they're being viewed for the first time by someone unfamiliar with the area. (Contrast your own instant gut reaction to main street vs back street stores in a town you're unfamiliar with)
It's therefore both logical and to be expected that Google would give a decent boost to high value commercial exact-match domains.