Google is set to announce a partially exclusive licensing agreement with Stanford that will provide automatically generated 3D models of buildings for Google Earth at Where 2.0. This is likely an attempt to catch up to Virtual Earth's comparable feature announced in November.
Until now, Google has relied completely on user generated 3D models which tend to be much higher quality, but hard to come by. This automatic building generator will surely bring cities to life by filling in the 3D gaps between the rare user modeled buildings and flat satellite imagery.
It is still uncertain as to what quality we can expect from these generated buildings, but I think it's fair to say that Google will strive meet or exceed what we currently find in Virtual Earth. A project at Stanford called "CityBlock" may be related to the upcoming announcement:
Broader applications of multi-perspective panoramas from video captured by moving vehicles include remote sensing and mapping, underwater photography, and archaeological documentation. This project is funded by Google.