Google's famous 'don't be evil' mantra was intended to be "a bit of a jab at a lot of the other companies, especially our competitors, who at the time, in our opinion, were kind of exploiting the users to some extent" according to Gmail creator Paul Buchheit, who was one of the people behind the original phrasing. It's since been replaced by the phrase "You can make money without doing evil" in Google's ten-point philosophy which is sometimes misquoted as "you don't have to be evil to be in business". It's easy to append the phrase 'but it helps' to either of those phrasings but when you're thinking about whether Google lives up to its ideal, you need to look at it the way Reddit co-founder Aaron Swartz did the other day, in the context of what Google considers evil.
The official philosophy doesn't cover censoring searches in China, or stopping censoring searches in China after claiming that the Chinese government is trying to hack you, or caving in on net neutrality principles for wireless networks or asking for forgiveness rather than permission after scanning in books wholesale. It doesn't cover not infringing patents in your mobile operating system or making sure you get the code right when you scan for Wi-Fi networks. If you read the examples it's all about forgoing short term gains and not making things worse for your users to make a buck - by keeping ads and search results separated.
Not putting Do Not Track headers or an IE 9-style tracking protection systems in Chrome? That could be about not believing the technology is mature yet, or about not undermining the river of ad money that brings you the free Web sites you search for through Google. Breaking US law by letting Canadian pharmacies advertise on Google when Mexican pharmacies are blocked? That could be the $500 million profit now earmarked as a fine or giving US customers a great deal on discount drugs; either way it's an expensive mistake. Forcing people to use real names on Google+ if they want to keep access to other Google services? That would be about keeping public discourse accountable, or maybe the same issue about not undermining the ad economy that brings you free services like Google+ and Gmail and Google Docs.
How a company chooses to run its business is (as long as it stays on the right side of the law), its business. The tricky part comes when people depend on free services from a company so much that they become seen as public utilities. That's the point ZDNet US blogger Violet Blue was making when she complained about having her Google+ account reviewed over whether she was using her real name; she was worried about losing the email and document sharing she relies on.
I don't agree with the 'real names' policy on Google+ because I think a 'real name' is a flawed way to get accountability; your proof of accountability is my hostage to creepy stalkers. Google has run into the identity problem that dozens of companies have been working on for a couple of decades - how much of who you are do you have to prove online with what credentials and security to get access to what services. That's a big problem to solve because it's about user behaviour and social mores as well as technology, and it's a problem Google isn't going to solve by asking people to send scans of their driver's licence; reducing the complexity of actual human interactions to what an algorithm can cope with ends up with a lot of people frustrated (and hello - anyone else worried about the data leakage of scanned identity documents?).
Evil is a nebulous enough concept in business (your patent infringement suit is my big business crushing the little guy). In user experience it's more like the old MNS comment - Make Not Suck. We'd all like a user interface and experience that doesn't suck; the question here is whether segregating ads from search results is all that takes (obviously not and I'll assume that's an example of a guiding principle rather than the only place it matters), and how well Google is doing at the broader question of non-sucky experiences.
There's also the question of what extra responsibility Google incurs by being so widely used that people treat it as a public utility they expect to have access to and forget the cardinal rule of free services offered by people who have a business to run. If you're not paying for it, you aren't the customer - you're the product.
UPDATE: "Google's approach implicitly assumes that nobody has a right to exclude Google from use of their intellectual property. At best, after litigation, they might have a right to be compensated by Google." A rather damning quote from the Wall Street Journal on Google's ask forgiveness rather than permission business model. That's very much their attitude to Java, from the evidence of the internal emails. As the WSJ goes on to put it; "that's not how the patent system is supposed to work".