i dont think google are deliberately pushing Adwords at the expense of everything in the SERPs -- because some of the stuff that they have done recently actually seems to hurt Adwords. Remember that map that scrolled over the ads?
What i think they are doing is pushing their own properties ahead of both Adwords and the SERPs. Keeping people on their site will make them more money in the long run, rather than just one click and out through Adwords.
What I dont get is this: if you appear in the local listings than you get a leg up over better sites.
Some of the sites in the local listings do not even have their own website -- the only link they have is straight to google's place page.
So how can google rate them better than the sites in the SERPs? they have no data. backlinks, bookmarks, visits, return visits... all those things that google uses to rate how good a result is, is null and void if the business does not have a website. and yet they still get placed above the good businesses in the SERPs.
of course, the average user doesnt have a clue about stuff like that. but people who follow this kind of thing can see that there are now plenty of ways of getting onto the 1st page without having to build up a quality site.
normal users still assume that the site at the top of the SERPs must be the "best" one, but that is no longer the case. That is the big change with Panda, i reckon. With a bigger concentration on "brands", and top local listings for businesses that dont even have websites, google has decided that famous names and popularity is more important than quality. that is probably what the user wants though.