The disturbing part is why it needs to be updated. Google is now going to track where users go and build up a database about them. It will then assign a type to that person. The example they give is if someone visits a lot of sports sites, they will be labeled as a "sports enthusiast". The reason they are doing this is of course for advertizing. The more specialized person that Google can promise to see someone's ads, the more they can charge for them.
This reminds me of the early days of Tivo. There was an article from back in 2002 in the WSJ (subscription required for the link, sorry) about a man who's Tivo thought he was "gay". Turns out he had the audacity to give a thumbs up to shows like Will & Grace. Tivo decided to start recommending (and recording automatically) anything they had labeled as "homosexual".
That can be somewhat funny and annoying when it's only happening on your personal Tivo. However, in this instance, we're talking about major privacy infringement. Lots of people have Google accounts, so it's not like Google won't know who is visiting which sites. Heck, I clearly use Google and I have a my account page with my name, age, etc. Google may claim they aren't associating this data together, but it's all there and would be very easy to do.
Google will learn quickly that I'm a geek, and I expect to start seeing lots of ads for Star Wars the Clone Wars, technology gadgets and the like. What do you think? Is this going to make the ads more appealing, or is the privacy infringement simply too much? What happens if you are incorrectly labeled?
I have a feeling Google's biggest label category will turn out to be "porn enthusiast".