they have confirmed that they are working on something but nothing confirmed as to whether it will be for the unwashed masses.
http://www.theregister.co.uk/2006/01/31/google_goes_desktop_linux/Google is preparing its own distribution of Linux for the desktop, in a possible bid to take on Microsoft in its core business - desktop software.
A version of the increasingly popular Ubuntu desktop Linux distribution, based on Debian and the Gnome desktop, it is known internally as 'Goobuntu'.
Google has confirmed it is working on a desktop linux project called Goobuntu, but declined to supply further details, including what the project is for.