Google's response to the Authors Guild lawsuit is:

We regret that this group chose to sue us over a program that will make millions of books more discoverable to the world -- especially since any copyright holder can exclude their books from the program. What’s more, many of Google Print’s chief beneficiaries will be authors whose backlist, out of print and lightly marketed new titles will be suggested to countless readers who wouldn’t have found them otherwise.

It adds:

Let's be clear: Google doesn’t show even a single page to users who find copyrighted books through this program (unless the copyright holder gives us permission to show more). At most we show only a brief snippet of text where their search term appears, along with basic bibliographic information and several links to online booksellers and libraries.

Under the last paragraph, the issues are fascinating. To show only the limited info described by Google would, IMHO, pretty clearly be a fair use. So the authors must be objecting to the fact that an entire book is being copied without permission, even if it is then hidden in an electronic vault. But what is the objection, if only snippets are shown? Is it a fear of Napsterization -- that once the digital copy is made it could escape into the world? Or is it simply a naked assertion of right -- "copyright law says no copying, so you must pay me to do it, even if it would actually be in my interest to have snippets made available."

Google might well win a decision that copying a whole book so that individualized snippets can be made available is itself a fair use because it greatly reduces overall transaction costs in the society. I find this argument persuasive, though it would be interesting to hear the other side.