Just out on Google’s official blog - They have had their systems attacked from sources in China with the apparent attempt to steal intellectual property and to seek e-mail addresses of human rights advocates in China. I believe Google when they swallowed hard the restrictions placed on Google.cn but as they say in their blog:

We launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results.

Now I also believe them when they say:

These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.