I think Pauric hits on a very important point, which is that Google
appears to be trying to optimize the overall process that starts with
entering the first search term and ends with (one hopes) finding the
right page link to click on.
The current interaction pattern often involves people firing one or a
few ill-thought-out keywords at the search engine and being largely
disappointed with what they get back. If we interrupt that and (gods
help us) force people to think then we may be violating some local
usability principles, but in service of a better overall experience.
I think that the speed at which the instant search performs is part of
that, as well as its attempt to hook in everything it knows about you
as a searcher. It's instructive to try the same searches when signed
in versus when not. Google is clearly drawing on information such as
your stated locale and browsing history in an attempt to give back
suggestions and results that have a higher probability of being right.
To use an American baseball analogy, I don't see this as a "home run"
feature, but more of a "solid double" that advances Google search past
most other search options available on the desktop (*) and it puts
them in a position to "score" if they continue to work at it.
(*) currently the feature is not available for mobile devices but
Google has said this will be coming. Given the relative difficulty of
typing on mobile versus desktop keyboards the cost/benefit equation
there will be totally different and much more in favor of this kind of
interaction, if it can be made sufficiently fast.