Synonyms are not new at all - they been integrated for many, many years. I remember discussing this shift at Pubcon Orlando, right after the Florida Update. I doubt that Panda is directly aimed in this direction - except that it may be punishing over-the-top "SEO copywriting" - something I've hated for years.
What may be new is the way the algorithm is evolving to plug them into the SERPs under certain conditions and not others.
What this direction does, IMO, is liberate writers to actually write well again. What good writer doesn't use synonyms and co-occurring phrases? I've been paid for writing since my undergraduate years and when SEO copy came along, I hated it - it was just a necessary evil.
Google is not a text-match retrieval search engine. It's been moving away from that fixation for several years. The average person doesn't get it and never did, only the tecchies and scholars could get it.
I'm all for this change. I think one of the reasons is that for some search queries there may be a lot of "results" but very few are top quality. Google wants to offer relevance (and synonyms are still relevant).
I'd say that quality content, quality writing that really addresses the market's needs, is the right way to go because it is the way Google is headed (and Bing too, by the way!) It's also what every market really needs and wants. Even if Google falls short in some areas for now, that doesn't mean we should overreact. Take the long term view and you can build long-term success.
[edited by: tedster at 11:42 pm (utc) on Aug 10, 2011]