More competition = healthier ecosystem. The question really is, will Google entering this arena increasecompetition or decrease it (by cutting off the air supply of smallercompetitors)? On the third hand, the Google Blog Searchis pretty basic so far and the real question is whether they'llcontinue to innovate and improve it (Google Maps) or let it mostly sitthere (Google Groups, though that might be changing).
Some of the more relevant / useful links:
Dave Sifry's reaction: Google's entry validates the space.
Bob Wyman welcomes Google Blog Search because it complements PubSub. Though I think I'm a bit fuzzy on exactly what the distinction is.
Threadwatch has some technical details.
Commentary on Technorati vs. Google from WebProNews (Charlene Li's take).