Google pinches Apple's head
Pretty much directly after that news broke, Google did two things that seem to be perfectly timed. A prototype of what Google envisions their own tablet will look and behave like, and a suspicious software update to Google's Nexus One phone.
Though I don't really think the UI for Google's proposed tablet is particularly great, I'm looking forward to see what it comes out like on the other end.
The Nexus One update on the other hand is equivalent to a slap in the face for Apple. It might seem like a fairly innocent piece of functionality they added, but it's not. Google added the ability to pinch and un-pinch the screen -- zooming in and out of websites and photos.
Why is that so interesting? Well, the whole reason it wasn't included in the Android operating system in the first place was because Apple holds the patent for that type of interaction. Google now appears to be willing to play hard ball if Apple has the nuts to take them to court. That said, I'm willing to bet Google has a few patents they can throw at Apple if it comes to that.